Jun. 13, 2025 Option Outlook

Topping continues

Good Morning! The topping continues as the market recovered back towards 6050.

Anything that happened yesterday during market hours will be overshadowed by what happened in the overnight. Israel attacked Iran in a pre-emptive attack on their nuclear facilities. This caused futures to sell off, although we did see some recovery. Additionally, in the overnight there was quite a bit of overvixing, which usually is settled in regular trading hours. But this appears to have already been fixed in the premarket. What does the options outlook show?

In the all expirations, it is hard to determine if there is enough hedging for this activity. There appears to be some put buying for short term moves.

This confirms that a lot of those put buys are for next week’s June option expiration, but the all-expiration chart shows someone bought a lot of 6000 strike puts yesterday.

These trades are hard to rely on in themselves since it is very difficult to determine the motivation of the customer. It could be hedging or speculation, you never know. But clearly someone knew something. The attack was telegraphed a little bit, but this has the potential of becoming a wider war if Iran starts calling in allies in Russia and China, then Israel does the same. The market tends to get ahead of itself a little bit on these matters, and the 6000 strike is a huge deal since it indicates hedging, not selling. What I’m looking for today are puts being bought, especially if we cross below 6000. If I see that, I’m looking for a low to buy. If I don’t see those, we may have seen a significant top this week.