Mike Khouw Analyses Open Interest In The S&P 500 Options

CNBC Options Action's Mike Khouw said on the show that the open interest for options that are going to expire on Friday is 353 million contracts, while the average open interest in the last three years for the December expiration is 334 million contracts. Khouw added that traders should watch carefully the S&P 500 index, which has an open interest of $444 billion of notional underlying value and a lot of it is concentrated within 5 percent of the current price of the index, up or down. At 2,050, there is $40 billion of notional value of the underlying, while 2,045 has $8 billion. Khouw explained that a move below 2,045 can bring more selling pressure, while a move above that level could trigger buying. He thinks that 2,025 is also an important level, because there is $30 billion of notional value of the underlying concentrated there.