The S&P 500 Approaches Key Support Amid Options Expiry
The S&P 500 is currently testing a crucial technical level near 6,735, while its overall upward trend remains intact. However, recent price movements and derivatives positioning suggest caution is warranted, especially with a major options expiration scheduled for November 21.
Technical Support and Indicators
The index has declined from its recent peak of 6,920 and is now challenging a strong support zone. This area corresponds to the 50% Fibonacci retracement from June 2025, a high-volume trading node, and a rising trendline. The daily Relative Strength Index (RSI) has fallen below 50, indicating a potential weakening in buyer dominance.
Options Expiry and Market Risks
The upcoming options expiration on November 21 features significant open interest, with a concentration of put options at the $6,000, $5,500, and $5,000 strikes. The Max Pain level, representing the point where option holders experience the least financial loss, is calculated at $6,450—substantially below the current index price.
"The Max Pain level is calculated at $6,450, significantly lower than the current price, which could spark dealer hedging and influence market movements."
If the S&P 500 fails to hold above 6,735, especially without support from positive macroeconomic factors, hedging flows could increase, driving higher volatility. This may push the index toward the 6,500–6,450 range.
Summary
As the S&P 500 tests a critical support level near 6,735 ahead of the November 21 options expiry, investors should remain cautious due to elevated volatility risks and potential downward pressure.
Author's summary: The S&P 500 is at a pivotal support level with rising volatility risks around the November 21 options expiry, signaling a cautious market outlook.