Source: Sina Finance

The options market is more worried that the S&P 500 index will rise and fall on Wednesday, the day the Federal Reserve makes interest rate decisions, and the magnitude is greater than on any similar occasion in the past year.

An affordable cross-option strategy shows that the US stock benchmark index is expected to fluctuate 0.95% on Wednesday when the Federal Reserve issues an interest rate decision statement and Chairman Jerome Powell holds a press conference. According to data compiled by Citigroup, the last time traders expected such large fluctuations on the FOMC decision date was in May 2023.

Driven by privacy, such as the overall mixed feelings of the earnings season, rising geopolitical uncertainty, and concerns that the Federal Reserve will maintain high interest rates for a longer period of time, traders expect the stock market to respond even more after the interest rate decision is announced. The S&P 500 index fell 4.2% in April, the worst performance since September last year.

Citigroup strategists said that options traders have always underestimated the volatility of the S&P 500 index on the day of the Federal Reserve's decision. Since the beginning of 2022, the intraday fluctuation of the S&P index on every Fed decision day has been greater than expected from the cross-modal options strategy.

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