SPY, QQQ: Crucial Trading Levels To Know This Week As Priced In By Options Market

Major Wall Street indices closed in the red on Tuesday ahead of Federal Reserve Chairman Jerome Powell's testimony before Congress. The Nasdaq Composite closed 0.16% lower while the S&P 500 lost 0.47%.

Another reason to cause concern among market participants is the higher-than-expected U.K. inflation. On Wednesday, the consumer prices index rose 8.7% from a year ago in May while core inflation, which excludes volatile food and energy, rose unexpectedly to 7.1% from 6.8%. Market participants appear concerned that interest rate hikes may continue longer than anticipated in the backdrop of persistent inflation.

Also Read: How To Trade SPY Options

Under these circumstances, here's a look at the options market outlook for two popular exchange-traded funds:

1. SPDR S&P 500 ETF Trust (NYSE:SPY): The ETF closed 0.52% lower on Tuesday at $437.18. Options expiring on Friday indicate significant open interest accumulation at the $440 Call strike, indicating the level could act as a resistance this week. On the downside, the $430 Put strike is showing significant open interest accumulation and could act as strong support in case of a sell-off.

2. Invesco QQQ Trust Series 1 (NASDAQ:QQQ): The ETF closed 0.14% lower on Tuesday at $366.90. Options data shows relatively higher open interest accumulation at the $370 Call strike indicating the level may act as a decent resistance this week. On the downside, the $360 level could act as support this week.

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

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