Traders Expecting A Sharp Move Off the 1150 Level Are Buying Straddles (SPY)

The past few months the markets have been in a very tight trading range testing the S&P 1150 resistance level on lighter than average volume. Because of the significance of the 1150 level dating back to October of 2008, options traders are pricing in a sharp move to the upside or downside from 1150 on the S&P's (NYSE: SPY).

The method traders are using to capture the move safely is by purchasing straddles, you are both leaning long and short.

Traders are putting on the March 115 SPY straddle for around 1.50. Index option traders are also putting on the 1150 straddle. Given the current low volatility environment the pricing for these spreads is quite attractive.