Yesterday I shared how traders were putting significant premium behind out-of-the-money puts at a single level. ~$5.8 million in total went into a short-dated strike. Today, traders have doubled down on those bearish sentiments. Another ~$4.135 million was added near the strike price from yesterday but with a bit more time on the expiration. The largest large came in at $2.9 million ABOVE ASK.
In total, ~$10 million in puts were placed between a $3 strike price from yesterday and today. Could this be the start of a new downtrend? Based on historical data going back to 1950, the average returns in the S&P500 on the month of May during election year has been negative until the last week of the month (follow the green dotted line).
Whether or not the trade plays out, the amount of premium behind these trades deserves our attention.
Here are the details of today’s orders: