On February 20, 2020 SPY was trading at $339 and on its way to a low of $218 one month down the road. The May 15th $170P (strike about 1/2 the price of the index at that time, expiration 3 months out) was "trading" at 3¢ ($0.03). Let's see what happened next: Feb 20 SPY = $339; SPY May $170P = 0.03 (Volume = 1) March 2 SPY = $309;, May $170P = 0.15 (Volume = 384) March 18 SPY = $240; (low = $218); May $170P = 6.38 (High = 9.30, Volume = 4,355) April 1 SPY = $246; May $170P = 1.58 (Volume = 2,413) April 15 SPY = $277; May $170P = 0.17 (Volume = 339) April 24 SPY = $280; May $170P = 0.07 (Volume = 52) This Weekend's Update will take this analysis one step further. Stay tuned.
