Mar. 13th, 2026 Option Outlook

Seeing Red

Good Morning! A whipsaw red day ended at lows with a -1.5% drop in SPX

Yesterday’s drop was more concerning because volatility didn’t participate. To be confident in a bounce, you want to see a vol event. While there was overvixing, we never really sniffed a vol event. Markets dipped below 6700, where we saw the start of support. The premarket is showing a reclamation of that key support level.

There is very little PCE event vol, but again that is difficult to measure accurately when markets are backwardized and there are bigger headlines out there. FOMC is also next week, what will that bring?

Next week for opex and FOMC, we see strong positive aggregate vanna. However, the support that once was at 6700 has been reduced. Yesterday’s non-vol event was supported by a slight decrease in support below and further reduction in this week’s aggregate vanna. I think next week can produce a relief rally.

While there is some support in April, there’s a lot of room below likely because of the high price of puts from this volatility regime. Additionally, there isn’t nearly as much aggregate vanna as there is next week. I think next week we can see a dead cat bounce that may exceed expectations, but once opex hits (give or take a couple of days), we can see another leg lower. Also, none of those scary headlines are resolved yet. I would be playing with a bearish tilt but staying sidelined until resistances are hit.