Options traders expect wild stock-market swings beginning later this month. Here are 4 things to watch.
After an eventful summer, U.S. stocks appear to have hit a pocket of calm. Over the past few sessions, trading volume has dwindled, while major indexes have mostly drifted sideways.
The recent calm in the US stock market may be short-lived, according to options traders who are positioning for increased volatility later this month. This shift in sentiment is notable given the market's tranquil summer, which was marked by low trading volumes and sideways movement in major indexes. The change in expectations is reflected in the options market, where traders are buying contracts that would profit from larger price swings.
The upcoming events that could trigger this expected volatility are not specified, but several potential catalysts are on the horizon. Earnings reports from major companies, economic data releases, and the Federal Reserve's next policy meeting could all contribute to increased market movement. Options traders are likely responding to these potential risks, as well as the historical trend of increased volatility in the fall season.
To watch next: key events that could impact market volatility, such as the Federal Reserve's meeting minutes, major economic data releases, and earnings reports from influential companies. Additionally, market participants should monitor changes in options trading activity, particularly in indexes like the VIX, which measures market volatility expectations. Shifts in these indicators could provide further insight into the market's sentiment and potential direction.
Originally reported by marketwatch.com. OptionNews adds analysis for finance & markets readers.