Jun. 27, 2025 Option Outlook

Rally everyone hates

Good Morning! A relentless rally yesterday as SPX advanced .8%

It is a rally that everyone hates. There are so many reasons to not be at all-time highs, yet here we are. Once the market decided to rally past 6000 after the cease fire in the Middle East, the chances of all time highs became more likely. Unless PCE comes in hot, we will probably be above all time highs at the open. How much higher can this go?

This is really the only chart you need right now. Those negative vanna drops that we saw at the beginning of the week are gone, mostly too little extrinsic value to register in the vanna chart. There’s initial resistance at 6200, we can even poke above that level. The one thing to note is that the rally is on thin ice on a swing timeframe. Anything bearish that sweeps the market below 6000 will create an acute drop. Yesterday on the order flow we saw a lot of selling at tops, but with the ITM dealer short calls and puts sitting at 6000, that vanna can keep pushing this higher into 6200-6250. A deep OTM put position and a moderately OTM call position centered around 6200 is probably the correct positioning to have right now.