Market Review: Trump’s Transition Trap

eOptionDaily Market Report

Published with permission from the options flow and sweep specialists at

A whipsaw overnight session gave way to a slow, choppy day as investors pulled back just hours away from Trump’s Inauguration. The opening bell would bring a steep sell off to the SPY as put flow overwhelmed light bids. But eventually, the dip buyers came back and pushed the SPY back towards unchanged for the day’s close.

Though sharks have paused their buying in terms of longer timeframed, aggressive bets, again today we saw signs of fear being woven into the fabric of SPY sentiment. That’s right, smart money was all over ETF puts again.

It looks like markets are going to coincidentally slow down as Trump takes the reigns. More importantly, it looks like people are finally starting to get ready for the regulatory repeal party to start and volatility to consume once more.


With the SPY taking the quick way down this morning, traders were left with some cloudy action early in the day. On the one hand you have smart money starting to build their way into ETF puts as momentum has visibly slowed on the indexes. The SPY itself is now seeing put flow come into Feb and March strikes. And then there was noticeable put action in HYG.

The slow, consistent put buying, paired with one of the names holding strength, created some confusion. But there was no denying that TMUS has smart money’s attention after 12k of the May $70 calls were scooped up today. And the company has earnings on Feb 9th.


Today’s HYG action is a little concerning if you recall that the last time we saw any action there, it was paired with the crude move to $35. But OPEC is playing nice lately, so what’s up? Rate hikes. Smart money is hedging Trump’s eagerness to get hikes moving north again. Or so it seems…

Another boring day if you’re looking for directional action that’s going to continue. While there’s put protection all over the place, the reality is there has yet to be a spark to drive markets one way or another. Between earnings season and a new administration, smart money is sitting on their hands and waiting for some of the dust to settle.

And you should probably do the same.

The SPY is going to continue playing ping-pong until fundamentals change in this market. And that’s two days away. Be patient.

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