According to BlockBeats, as the Federal Reserve's interest rate cut in September is almost a foregone conclusion, options traders expect the stock market to operate steadily before the CPI data is released on Thursday. However, if the data shows inflation heating up, this bet may carry risks.
The logic behind the market's expectation of an interest rate cut is that U.S. job growth has stalled, and the economy needs stimulus. Weak employment data has led investors to fully digest the expectation of a 25 basis point rate cut by the Federal Reserve. U.S. stocks fell slightly on Friday, and the fear index rose slightly.
Options traders are betting that the S&P 500 index will experience about a 0.7% two-way volatility after the CPI is released on Thursday, lower than the past year's average actual volatility of 1%. Any positive or negative data could change the market outlook.