Friday’s SPX Options Chain Already Priced in Today’s Drop

Discussion in 'Options' started by TanukiTrade, Sep 3, 2024.

  1. Today’s sharp 2.2% SPX decline wasn’t a surprise for those who looked closely at the options metrics after Friday’s spot price fakeout. Ahead of the long weekend, market participants priced in the downside with both short- and long-term options.

    AFTER FRIDAY CLOSE:
    [​IMG]


    Put options were nearly twice as expensive as calls at equivalent Expected Move distances before Tuesday's open. The price have a fake-out at friday.


    AT TODAY CLOSE:

    [​IMG]


    While today’s drop has led to some call skew on weekly options, suggesting a short-term rebound, the long-term bearish sentiment remains intact. Key unemployment data this week will be crucial for the market’s next move.


    Conclusion: Always check the option pricing skew before any moves.