Market On Open, Monday 15 September

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Heavy Weather All Week

by Alex King, CEO, Cestrian Capital Research, Inc

This week we have the following psychodramas:

• FOMC on Tuesday & Wednesday, with the outcome publicized Wednesday
• Vix options expiration on Wednesday
• Weekly options expiration on Friday

Now of late, options expiry dates have been largely nothingburgers, possibly because the rise of 0DTE options is taking the heat out of the weekly, monthly and quarterly expirations. If you can hedge daily, there’s maybe less pressure buildup for the longer-dated expiries. I’m not sure. Perhaps we just have a low-volatility environment and so the usual dramatics around opex haven’t applied lately.

Markets though have a way of lulling investors into complacency, so it pays to be ready and armed in case this week does get ugly. The bear case? We get a sell-the-news run for the door after FOMC and that delivers a payday to market-makers who have been selling September calls to overly bulled-up investors. Bull case? A continued grind up as we’ve seen every month since April.

Well, nothing to do but see how it plays out and react accordingly. If you’re unhedged (which has been the smart money since April), just think about how to react if it all turns red. Hedged (the too-careful money since April)? A selldown into October is likely an opportunity to sell the short hedges before a Q4 runup. We’re still in a bull market, so any selldown I would expect to be a correction not a bear.

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