John Carter Novice Trade: Breakout in Sight for SPDR Healthcare ETF

NEW YORK (TheStreet) -- As monthly expiration continues to inch closer we begin to see some interesting phenomena in the markets. Maybe phenomena isn't the right word as it's fairly obvious what's going on, but not everyone is aware of how open interest can effect a market heading into expiration, especially quarterly or "witching" expirations. I spoke about open interest in more detail in yesterday's Big Idea.

Looking at the open interest shown in today's Standard & Poor's 500  chain you can see the number of contracts still out in the wild for this particular product. It behooves market makers to have the index trade near this price into expiration, and with that in mind I don't think we see much directional movement for the next two days.

SPX Open Interest

Source: thinkorswim

Rather than try to find a one-day opportunity to try and get decay from this idea, I'm going to step out into July for a new position on SPDR Healthcare ETF  (XLV). It is setting up with a fresh daily squeeze and I think the signal should be good for a test of the old highs at least, a breakout from these levels wouldn't bother me either. I'm going to open my bid for the July 73 call at $2.20 and be willing to add to the position should we find it cheaper next week.

XLV Daily

Source: thinkorswim

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