【Options】How to trade tomorrow's CPI?

The key economic data is the US CPI for August will be released tomorrow night.

Economists surveyed by Bloomberg expected headline CPI to rise 8.1% over the prior year in August, a moderation from 8.5% increase seen in July, and falling by 0.1% month-on-month. The core CPI increase by 6.1% year-on-year in August, higher than 5.9% in July and 0.3% month-on-month.

However, investors expected that the Fed would raise interest rates by 75bp in September. Because the 8.1% inflation rate is still much higher than the 2% inflation target emphasized by Fed. Fed officials have been very hawkish in the past week. Traders are pricing in a 90% chance of a 75 b p rate hike at the September meeting, up from 57% a week earlier, according to CME Group's Fedwatch Tool.

Wall Street looks unscrupulous. There is no panic without uncertainty. VIX fellback into the low volatility range.

I was very satisfied with the two event-driven events I did last week, Sell Put before Apple's press conference and Sell Put after NVDA plummeted.

Special reminder, this Friday, September 16th, is the Four Witches Day of US Stocks!

I plan to shift from individual stocks to a market-oriented strategy, and the indexes will determine the direction.

Last week, the S&P 500 rose for threeconsecutivetrading days. Especially on Friday, it opened higher and closed above the 50-day line, leaving a gap (4010-4020), but the trading volume shrank. According to analysts, it is a big jump from short squeeze, which is reasonable. Sellers covered their short positions before CPI releases.​

Another possibility is that investors have traded slowing CPI growth rates since last Friday. The S&P 500 would rush to make up for the big gap left by August 22nd, or sell in news after CPI to land?

CPI + Quadruple witching day, no matter how it plays, the market is bound to be volatile, which may be a good time to play index ETF options strangle.

Let's see the options chain of$Invesco QQQ Trust(QQQ)$, the OI is over 50 thousand as follows:

Call: $350 ≈ 60,000, $330 ≈ 120,000, 325 ≈ 100,000, 320 ≈ 50,000, 310 ≈ 100,000

Put: $330 ≈ 80,000, 325 ≈ 100,000, 320 ≈ 50,000, 315 ≈ 50,000, 310 ≈ 80,000, 3 million ≈ 160,000, 295 ≈ 70,000, 290 ≈ 80,000, 285 ≈ 70,000, 280 ° 65,000, 275 ° 70,000, 265 ° 50,000, 260 ° 65,000, 275 ° 70,000, 265 ° 50,000, 260 ° 65,000

The quantity of Put is much larger than that of Call. This does not necessarily mean that institutions are not optimistic, or it may be because they hold too many weighted-stocks and need to hedge with indexes.

Anyway, we can make some simple choices, such as Put@300 & Call @ 320, or put@305& Call @ 315. Currently, the IV is around 30, and more people have placed higher bets.

The strangle strategy has a high winning percentage during the week.

Personally, I predict the market will make up the gap below, after the CPI result. Therefore, I traded a Sell Call tonight. I Sell SPY Calls at the strike price of $420, expiring on Sep. 16th. I don't think the S&P 500 will soar to 4200.

$SPDR S&P 500 ETF Trust(SPY)$ $NASDAQ(.IXIC)$ $S&P 500(.SPX)$