Cheapest IV Ever Going into an FOMC Minute Release

Andrew Giovinazzi

BY ANDREW GIOVINAZZI

November 21, 2023

Yo Pit Crazies,

Trading options is about spotting opportunities. Some days there are a lot of opportunities and some days they are hard to find. Holidays can be fun because traders are trying to get the option prices down as fast as possible. I know I used to do the same thing.

Now as a retail trader, I spend more time waiting instead of trying to move markets. The Fed is moving their meeting date to Tuesday since they want to take Wednesday off I guess.

Also Nvidia Corp (Ticker: NVDA) is posting earnings tonight. I don’t know about you, but the whole summer rally was on AI and NVDA.

These recent killer rallies? The Fed does not need to do anything anymore with 90 Billion Dollars in QT in the pipeline and inflation slowing down.

SPX sigmas

This is a recipe for massive moves in stocks.

So how did the market price it and how will I trade it?

SPY IV in the single digits

That is just how the market prices the holiday. 1.5 days chopped out the week and Friday’s straddle is under $4. In 2023 alone on an FOMC day, that straddle got to $8 or more. Right now, no one is buying options for this week because they think the rally is done or we cannot sell off.

I think either is very possible and there is the catalyst of NVDA having a huge number just after the JPow went slightly dovish.

Catalyst-> Low Vol-> Massive potential for owning options

I think the Fed will stay the course and NVDA prints a good number and gas goes on the fire and we tickle 460 SPY this week. In OP Mentoring, we set up weekly low theta trades to take advantage of the current option pricing. We did it Monday.

Come check it out.

To Your Trading Success,