Aug. 11th, 2025 Option Outlook

Opex week

Good Morning! A decent .8% pop as markets climbed to the 6400 pin.

Volland came back just in time to identify 6400 as a clear opex pin with markets climbing just short of it. The premarket today suggests it will be a quiet Monday as well.

Tomorrow is CPI, which should provide a huge clue about the FOMC’s next move. The NFP report provided scary news for the economy, as the seasonally adjusted job creation was not only below expectations, but the prior months were significantly reduced. It cost the Labor Dept. head her job, which now casts doubt over the independence of the report. If CPI increases, that puts the Fed in that terrible stagflation position, which is a no-win position for monetary policy. What does the option outlook show for CPI tomorrow?

This week is opex week, and the high vanna shows that the 6400 pin should dominate at least until Wednesday.

However, CPI event vol is actually quite weak, and the number itself can be quite impactful on a macro scale. If CPI comes in hot, we can expect a significant market selloff.

Roughly 6265 is what I would want to see broken before we start getting cascading vol events and a more significant selloff. Two Fridays ago, we saw how quick market makers were to readjust pricing when markets dropped. But a lot of hedging drops off this week for opex, so be careful using those levels as guides for future selloffs.