SPY, QQQ: As S&P 500, Nasdaq Nudge 9-Month Highs, Here's The Options Market Outlook For These ETFs

Wall Street has so far maintained a calm despite the debt ceiling crisis extending into the fourth week of May. The Nasdaq Composite is hovering around highs seen in August while the S&P 500 managed to nudge its 9-month peak levels.

The question remains how long will the market withstand the political stand-off that appears to overlook the sense of urgency for a resolution. Under these circumstances, the options market tends to give a better clarity about immediate expectations of traders. Here's a look at what it indicates about the following exchange traded funds:

1. SPDR S&P 500 ETF Trust (NYSE:SPY): The ETF ended 0.04% higher on Monday at $418.79. Options expiring on Friday indicate significant open interest accumulation at the $423 Call strike, indicating the level could act as a stiff resistance in the short term. On the downside, traders appear to be factoring-in the $415 level as a near-term support.

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2. Invesco QQQ Trust Series 1 (NASDAQ:QQQ): The ETF closed Monday's session 0.34% higher at $337.64. Options expiring on Friday indicate significant open interest accumulation at the $338 Call strike. The level being closer to Monday's closing price indicates traders may be considering limited upside for the ETF in the near term. On the downside, the $335 level may act as a first line of support. If the level is breached on the downside, traders will be eyeing the $330 level to hold the fort during a sell-off.

Open interest levels only provide a fair idea about support and resistance levels. Any major macro event or a breaking news may lead to significant movement in asset prices and a subsequent shift in open interest levels.

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