Major Wall Street indices ended in the green on Tuesday following the release of the May Consumer Price Index (CPI) report that showed inflation rose 4% on an annual basis, marking its lowest level in two years.
The SPDR S&P 500 ETF Trust SPY closed 0.66% higher on Tuesday while the Invesco QQQ Trust Series 1 QQQ rose 0.77%, according to Benzinga Pro.
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Market participants are keenly awaiting the Federal Reserve's June policy announcement on Wednesday with majority of investors expecting the central bank to pause its rate hiking campaign this time. Under these circumstances, here's a look at options market outlook for the following exchange traded funds:
1. SPY: The ETF closed at $436.66 on Tuesday. Options expiring on Friday show significant open interest accumulation at the $440 Call strike, indicating the level could act as a stiff resistance this week. On the downside, the $430 level could act as a short term support. If there is a significant sell-off, traders expect the $425 level to act as the second level of support.
2. QQQ: The ETF closed at $363.26 on Tuesday. Options data show significant open interest accumulation at the $365 Call strike, indicating the level may provide resistance in the short term. If there is a significant rally, traders are factoring-in a second level of resistance at the $375 level. On the downside, the $355 mark could provide support in the near term.
Open interest figures only provide a fair idea about support and resistance. Any major newsbreak or macro event could lead to significant movement in asset prices and cause a subsequent shift in open interest levels.
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