Normally we look for an Equity Option BIAS running into the OPEX that indicates the direction of the to be expected action. Occasionally players get ahead of themselves too early which results in spikes more than a week before the OPEX. Case in point was last month.
Don't get me wrong, a good spike within the 5 day window is a reliable indicator, but this time we are slightly outside these bounds, where they bought large amount of calls -maybe- too early. This will be a tight call......but odds are against the bullish outcome....
Below you'll find a chart of the action in the equity options market (10d average) and you will see that we are approaching the orange neg. Divergence line from Dec-Jan in the lower chart.
Either we respect the orange line and correct into the OPEX (option expiration) or we see a bullish blow off.....
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