Last trading week started with negative news: Standard & Poor’s lowered the rating forecast for the USA, thus making S&P500 decline by 1.5% and break below the lower border of the range. However its behavior during the following days showed that the overheated US economy was still not ready for corrections despite the fact that the stock indexes were expected to decline. On Tuesday the futures of S&P500 consolidated above 1300, while on Wednesday it got back to the initial level (before the news release).
So, the price keeps moving within the 1290 - 1338 range. Consequently, even despite the short pre-Easter week and the expected declining trading activity, the weekly movement range reached 47.5pts. Monday was the day of the highest volatility (27.5pts) while the lowest volatility value was seen on Thursday (9.75pts). The impact on the expected volatility was even more considerable: on Monday the VIX value grew from 15.3 up to 19. However, on Wednesday the market calmed down and the index reached the lowest value of the week (14.3pts).
This week’s economic calendar:
Wednesday, April 27th, is expected to be the key day of the week in terms of the impact on the direction of the forthcoming movement and in terms of the possibility to cause volatility spikes, especially during the following releases: FOMC Statement, FOMC Press Conference. Thursday is going to be quite important as well (GDP and Unemployment Claims). Consequently, this trading week option traders can buy volatility at the beginning of the week when the volatility level is low and sell it during or right after the news releases when it is high.
Provided by the Department of Options,
