S&P 500: Options Traders Get Resistance Expectations Right This Week. What's Next?

Options traders got it right last time — at least with the S&P 500 — even if they failed to determine the correct resistance level of a bulldozing Tesla Inc stock. Professional traders, who prefer shorting options over buying them, had determined the index might face resistance at the 4,450 mark this week, which witnessed important testimony by Federal Reserve Chair Jerome Powell before Congress.

The index hit an intra-day high of 4,400.15 on Tuesday before paring some gains. It closed at 4,381.89 on Thursday. On the downside, the S&P 500 did breach the support of 4,400 but has managed to hold above the second level of support at 4,320 so far.

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Under these circumstances, here's a fresh look at crucial trading levels for the index as the market gets into the last week of June:

1. Resistance: Options expiring next Friday show significant open interest accumulation at the 4,400 Call strike indicating a downbeat outlook for the rest of the month. Traders are appearing to have priced in a limited upside for the index in the short term.

2. Support: On the downside, the 4,320 and 4,300 Put strikes have relatively higher open interest accumulation at the time of writing. With the anticipated support levels priced about 1.5% lower than Thursday's closing price, traders are likely factoring in a few lackluster sessions next week.

Open interest numbers only provide a fair idea about support and resistance levels. Any major news break or a macro event could lead to significant movements in indices and cause a subsequent shift in open interest levels.

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