Bob Knights Liver said:
topher06 said:
I don't think the market would react to 75bps. Isn't that already 100% priced in, with 100bps slightly priced in? Don't think anyone expects 50bps or lower.
If 75 bps, it's possible there's not much reaction. It's also possible that enough volume hedged to the downside in case of a 100bps hike that when they close out those we'll see a move up. If too many are overextended short, that could cause a bit of a squeeze and further push the indexes higher. Just a possibility at this point, but something to make sure we're prepared for. IMO the big takeaway is just not to go full bear here because there is a plausible short-term bull thesis for now.
I did go ahead and enter some January 2023 SPY 425 calls, but sold 10/21 410 calls on my long SPY shares. Absent the 100bps rate hike, I do think there should be some bias upside here because I continue to think last week was an overreaction, but don't have much confidence in the macro economy. Suck at technical analysis though, so this is just my opinion on fundamentals.
EDIT: I may not end up holding the SPY calls overnight even with the long expiry if we get some upward momentum into close. Up 6% on these, which doesn't suck as I was anticipating needing some good (or not as bad as possible) news from the Fed. Obviously, even the long expiration options move quickly so 6% can be gone in a minute.