This Wednesday marks the first FOMC meeting led by Kevin Warsh, with markets anticipating a cautious outcome. Current derivative market odds indicate a 3.7% chance of an interest rate hike. Analysts are particularly focused on the Nasdaq-100 index’s option pricing, which shows a trend of less than average price change on FOMC days, averaging +/-0.75% over the past twelve meetings, down from +/-1.00% in late 2025.
Furthermore, data suggests that the at-the-money (ATM) straddle has historically been overpriced on ten of the last twelve FOMC announcements. A consistent strategy of selling this straddle would have yielded a net gain of 450.04 points. Notably, the most significant price drop occurred on December 18, 2024, when the NDX fell by 3.59%. Conversely, the only notable gain was a 1.30% increase in March 2025. This history implies that while short-volatility strategies may have led to profitability recently, substantial market movements can still pose risks during FOMC announcements.
5 Stocks Our Experts Predict Could Double In the Next Year
By submitting your email, you'll also get a free pivot & flow membership. A free daily market overview. You can unsubscribe at any time.
