top of page

What is Oppomere?

Oppomere is an acronym derived from (Op)tions (Po)sitioning (Me)an (Re)version model. It's purpose is to identify times and prices with an elevated probability for an intermediate trend to stall out, end and reverse. These points in time are often ideal for closing directional trades, initiating risk reversals, or selling premium.

Oppomere consumes options positioning data and generates charts that are simple to understand and can be quickly analyzed as part of your trading process. Charts are updated at daily intervals. Oppomere is not currently able to generate intraday or live charts and it's unlikely it ever will be unless significant changes are made to the structure of US exchanges.

How Can I Use Oppomere Charts?

Here is an example of an Oppomere chart for QQQ:



The top section of the chart contains a candlestick plot of the daily spot price of QQQ as well as bullish (green) and bearish (red) extreme price levels. There are three bearish extreme levels and three bullish extreme levels plotted on each chart. The darkest lines are based off aggregated positioning from all option expirations and the size of the dots at each plot point represent the relative size of the positioning. The larger the dot, the greater the size of the options positioning on that date vs. history. The lines that are plotted in slightly brighter colors are based off options expiring within 3 months while the lightest colored lines are based off options expiring within 2 months. More information on how the difference between the three time frames for bearish/bullish extreme levels can be found in this blog post: Spot price tends to spend very little time outside of the extreme levels and moves significantly beyond those levels tend to result in more signficant, faster trends reversals. Individual stocks tend to trade into/through the bearish and bullish extreme levels at a greater frequency than major indices/ETFs like SPX and SPY. The largest stocks like AAPL tend to trade a bit more like the large indices than stocks with smaller market caps. Also, each issue tends to trade with it's own unique characteristics based on who uses options on the issue and for what purpose. For example, during a market sell off, SPY may decline to within 3-4% of the bearish extreme price level before bottoming and reversing while SPX may still be 6-7% away from the bearish extreme level. The largest options positions for SPX tend to be opened by the largest institutions while SPY tends to be used by smaller market participants. These parties tend to have different goals and hence the options used by these groups tend to differ significantly in terms of the distance of strike prices from spot prices as well as the time left until expiration.  So while SPX and SPY spot price generally have extremely low divergence, positioning between the two often looks quite different and it is best to review current and historical positioning of both when judging the probability that a trend reversal is coming.


The middle section of the chart contains 5 data sets. The green line shows the number of deltas that should theoretically be held long to hedge all the calls that are open on the issue. Similarly, the red line shows the number of deltas that should theoretically be held short to hedge puts. The blue line in between shows the net of those two. For example if 300 deltas should be held long to hedge calls and 100 deltas should be held short to hedge puts then the net value shown by the blue line would be 200 deltas. When the blue line is above 0 it indicates that positioning is net long and it's net short when it is below 0. The top most black line shows the absolute maximum number of deltas that would need to be held long if all call options had a 100% chance of expiring in the money. The bottom most line shows the maximum deltas that would need to be held short if all puts had a 100% chance of expiring in the money.  As the green line rises, it indicates a need for dealers to be buying the underlying issue in order to increase the size of their hedges and thus stay delta neutral. As the green line gets closer to the top most black line, dealers will have less and less to buy in the underlying issue and hence buying activity from dealers will reduce even if the underlying issue continues to trade higher. The same applies to the red line and the bottom most black line with respect to dealers needing to sell/short the underlying issue. While the Y-Axis on this section does show numbers, the precise number of deltas is less important than the relative levels observed in the past. For example, the blue line might show that 100 billion deltas should be held long in order to be delta neutral across call and put open interest. If previous trend reversals happened when that number reached 200-300 billion deltas then a reading of 100 billion is not of particular importance.  Generally speaking, trend reversals are significantly more likely when the green, red and blue lines are all near or beyond levels where previous trend reversals have occurred.


The bottom section of the chart shows the average delta (from 0 to 100) of calls (the yellowish bars) vs. the average delta of puts (the green bars) as well as the ratio of those two values (the purple line).  Generally, the higher the average delta of puts, the greater the probability of a bullish trend reversal where the underlying issue trades higher. The higher the average delta of calls, the greater the probability that an uptrend ends and a downtrend begins. Trend reversal becomes significantly more likely when either of those metrics exceeds 50. Trend reversals can happen with readings below 50 but that tends to be a less common occurrence.  While trend reversals become more likely with readings over 50, it is also important to consider the relative difference between the average call delta and average put delta. Every issue can have a very unique set of participants in it's options market.  If participants generally expect that a stock won't decline more than 10% over the next 3 months and that upside is unlikely to be more than 5%, the options positioning on such a stock is likely to look far different than on a biotech company that with an upcoming FDA decision that can make or break the company for years to come.  The purple line shows the ratio between the average call and put deltas. If the average call delta is 60 and the average put delta is 5, it indicates lopsidedly bullish positioning that creates a significant probability of an uptrend ending. In this case, the purple line would read a 12 and would be all the way at the top of the graph. However, if the average put delta was 40, then the average call delta of 60 becomes much less relevant. and the purple line would be at a fairly neutral reading of 1.5. The closer the purple line is to the top or bottom of the graph, the greater the probability of trend reversal ahead.

When Should Oppomere Be Ignored?

The value of Oppomere comes from the predictability of dealer actions. If we can predict what they will do next, how much they will buy or sell based on the aggregated positioning of market participants, then we can better determine when trends will end.  However, there are times where significant events occur, whether at a company level or something more global/macro. For example, in March '23, the sudden realization by market participants that the balance sheets of regional banks made it extremely difficult for them to maintain historical levels of profitability, the entire sector was re-rated in very short order. Many large market participants were selling out of most or all of their holdings in the stocks of these banks. Many of the regional bank stocks as well as ETFs like KRE printed bearish extreme readings that were multiple standard deviations beyond anything that had since the Great Financial Crisis of 2008. The bearish extreme readings did not generate significant trend reversals higher because the size of the options positioning was relatively small compared to the shares being sold by long term holders of these stocks. Bearish extreme positioning helps inform us on what dealers will do in the future, but that's only useful when the size of that activity is significant in terms of overall trading in the underlying issue. What a material event occurs, real buyers or sellers can create a level of activity that neutralizes the affect of what dealers are doing. Similarly, some stocks just don't have much options activity, and hence, the effect of dealers buying or selling the underlying issue to stay delta neutral has very little impact on spot price.

bottom of page