A busy week lies ahead with key economic data releases and earnings announcements from major tech companies including Meta, Microsoft, Apple, and Amazon. The week features a host of reports, such as the FOMC rate decision on Wednesday at 2 PM, followed by a press conference, and US employment data on Friday at 8:30 AM.<\/p>\n
Additional data releases include Australia’s CPI on Tuesday night, and several announcements on Wednesday, such as ADP nonfarm payroll change, expected at 75K this month versus -33K last month. The advance GDP for Q2 is also scheduled with an estimate of 2.5% compared to last quarter\u2019s -0.5%. The Bank of Canada and Bank of Japan rate decisions are also expected, with no changes predicted. Thursday sees Canada’s GDP estimate at -0.1%, and the US Core PCE price index estimate at +0.3%. <\/p>\n
Tech companies, among others, will announce earnings this week. Meta, Microsoft, Apple, and Amazon will report, alongside UnitedHealth, Boeing, Merck, Visa, and others. This coverage includes releases by Waste Management on Monday after the close, with key announcements from UnitedHealth, PayPal, Boeing, Merck, and others before and after close on Tuesday through Friday.<\/p>\n
We see the coming days as a period of significant event risk, which should lead to a sharp increase in market volatility. The CBOE Volatility Index (VIX), often called the market’s “fear gauge,” is currently hovering near 14, a relatively low level that we do not expect to last. This suggests that options pricing may not yet fully reflect the potential for large price swings.<\/p>\n
Derivative traders should anticipate a surge in implied volatility, especially in options tied to the major tech companies and broad market ETFs like SPY. For instance, options markets are currently pricing in an approximate 8.5% post-earnings move for Meta, a significant jump that will inflate premiums leading up to Wednesday’s close. We believe the cost of protection and speculation will rise steadily as these key events draw nearer.<\/p>\n
The Federal Reserve’s meeting will be the week’s centerpiece, and traders should focus less on the rate decision itself and more on the tone from the subsequent press conference. Historically, the S&P 500 has moved an average of nearly 1% on Fed decision days, but the real story for option sellers is the reliable collapse in volatility once the uncertainty is resolved. Given that recent inflation data like the May CPI came in cooler than expected at 3.3%, any hawkish surprise from Powell could trigger an outsized market reaction.<\/p>\n
For those of us who believe the market may be overestimating the potential moves, selling premium could be an effective strategy. By constructing strategies like iron condors or short strangles on names like Apple or Amazon, traders can profit if the stocks move less than what the expensive options are implying. This is a bet that the post-announcement reality will be calmer than the pre-announcement fear.<\/p>\n
Alternatively, the immense concentration of the market’s recent gains in the “Magnificent 7” creates an opportunity for a sharp repricing on any disappointment. Buying simple puts or calls on these names is a straightforward way to bet on a larger-than-expected move, which could be triggered by weak guidance or a significant earnings miss. A trader positioned for a downside surprise in a name like Microsoft could see substantial returns if results don’t justify its high valuation.<\/p>\n
Finally, do not get complacent after the tech earnings and central bank decisions are out of the way. Friday’s U.S. employment report remains a critical catalyst that could either validate or completely reverse the market’s initial reactions. A surprisingly strong jobs number and wage growth figure could reignite inflation fears, sending ripples through a market that thought the week’s main risks had already passed.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Key economic data and major tech earnings, including Meta, Microsoft, and Apple, dominate a busy week.<\/p>\n","protected":false},"author":62,"featured_media":17027,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-27338","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/27338","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=27338"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/27338\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17027"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=27338"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=27338"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=27338"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}