But for now, the bet is on more volatility.
Last week there were some sharp changes that led the Cboe Volatility indexor VIX, which measures the magnitude of price moves in the S&P 500 index, to levels not seen since the peak of the pandemic in 2020. Based on the cost of at-the-money put and call options, traders are positioning for the S&P 500 to move 1.2% in either direction on Wednesday when the consumer price index report is released, according to Citigroup Inc.
If that price holds through Tuesday’s close, it would be roughly in line with implied moves on Aug. 23, when Chairman Jerome Powell is expected to deliver remarks at the Jackson Hole economic symposium, and Aug. 29, the day after Nvidia’s earnings report.
“The options market is not yet sending a signal that everything is OK for stocks,” said Rocky Fishman, founder of derivatives research firm Asym 500. “When volatility is high, historically it’s a good time to buy.” actionsBut to some extent that has already happened, so the CPI will be an important catalyst.”
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