But for now, the bet is for more volatility.
Some wild swings last week brought the Cboe Volatility Index, or VIX, which measures the magnitude of price moves in the S&P 500 Index, to levels not seen since the height 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.
Should that pricing hold through Tuesday’s close, it would be roughly in line with the implied moves on August 23, when Chair Jerome Powell is expected to deliver remarks at the Jackson Hole economic symposium, and August 29, the day after Nvidia’s earnings report.
“The options market isn’t sending an all-clear signal just yet for stocks,” said Rocky Fishman, founder of derivatives analytical firm Asym 500. “When volatility is high, it’s historically a good time to buy equities, but to some extent that’s already happened, so CPI will be an important catalyst.”
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