Kiplinger: Stock Market Today: Stock Market Today: Oil Cools Off, But Stocks Remain Stymied

Options Solutions in the News

(Kiplinger-Kyle Woodley)

“The options market is telegraphing that it is more worried about expiration Friday than the outcome of the Federal Reserve’s rate-setting committee on Wednesday,” says Michael Oyster, chief investment officer for asset-management firm Options Solutions. The price of on the SPDR S&P 500 ETF (SPY) straddles – a trading strategy that investors use when they are unsure if stock prices will rise or fall – indicates the March expiration is potentially more disruptive to stocks than the closely watched Fed meeting.”

“The straddle – that is buying an at-the-money put and call with the same strike price and expiration – suggests the stock market will move 2.3%, up or down, on Wednesday. On Friday, when standard March options expire, the straddle suggests the S&P 500 may move 3%, up or down. The options market has literally priced what a difference a day makes.”

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