SPY Options Today: Third Down Day, CPI Tomorrow
· 5 min read
SPY closed today at $757.89, down from $762.40 yesterday. That’s the third straight red close — Tuesday’s $765.96, Wednesday’s $762.40, and today. Call it roughly a 1% slide over three sessions. Not dramatic. Not nothing either, especially with what’s on the calendar tomorrow morning.
QQQ had the worse day. It closed at $708.69, down about 1.06% from yesterday’s $716.31, while SPY only dropped 0.59%. Tech underperformed the broader market today. I’m not going to guess why — PPI came out this morning along with jobless claims, and I don’t have the actual print in front of me to point at. What I do have is the close, final and settled, and the spread between how SPY and QQQ traded on the same day with the same macro backdrop.
That spread matters more to me as an options guy than as a stock guy. When one index moves harder than another on the same news day, the options on that index are going to carry it into the next session. If you’re holding QQQ contracts tonight, you’re holding something that already moved more than SPY did today, walking into a print tomorrow that hits both.
Tomorrow Is the Real Event
CPI drops at 8:30am ET tomorrow. Core CPI is forecast at 0.2% month over month, 2.4% year over year. Headline CPI is forecast at 0.4% month over month, 3.4% year over year. UMich consumer sentiment follows at 10am, forecast flat at 51.0. This is the last big data point before the September 15-16 FOMC meeting, which is exactly why it’s not just another Friday.
I’m not going to tell you where I think CPI lands. I don’t know, and anyone posting a confident number before 8:30am tomorrow is guessing same as you. What I will tell you is what a scheduled 8:30am release does to options pricing, because that part isn’t a guess — it’s mechanics.
Implied volatility gets bid up into any high-impact scheduled release. Market makers know exactly when the number drops and they price the uncertainty into every SPY and QQQ contract expiring anywhere near it. That’s not fear, that’s just how the order book works. If you buy an option tonight, you are paying a premium that already assumes tomorrow morning is going to move. When the number actually prints and the initial reaction fades, that premium tends to get crushed out of the option regardless of which direction price goes — that’s IV crush, and it’s the single most common way options buyers lose money on data days even when they called the direction right.
What Three Down Days Into CPI Actually Means for Sizing
The part that’s on me, not the market, is what I do with my own size tonight. I’ve been trading SPY options for six years. Year 1 I lost $11,400 doing exactly what feels natural right now — adding to a position because it’s been down three days and “it has to bounce.” Year 2 I broke even mostly by refusing to do that anymore, which felt like standing still while everyone else seemed to be moving. Years 3 through 6 I’ve been profitable, and the biggest reason is boring: I stopped treating a losing streak and a scheduled catalyst as separate risks that each get their own small allowance.
Tonight they’re not separate. A three-day decline plus an elevated-IV setup plus a data release that can move the index a percent or two in either direction inside a five-minute window is three risks stacked on top of each other, not three risks sitting side by side. The size that made sense on Monday, before any of this stacked up, does not make sense tonight even though the chart pattern looks almost identical to a normal Wednesday. That’s the trap. The setup looks familiar. The risk underneath it isn’t.
There’s also a simpler mechanical point worth sitting with: options don’t just lose value when you’re wrong on direction. They lose value from time passing and from IV coming back down after an event resolves. Holding a position through a three-day slide into a CPI print means paying for elevated IV twice — once in the premium you already own, and again if you’re tempted to add more tonight at an even richer price. The contract doesn’t know you’re frustrated about being down three days in a row. It just prices the uncertainty in front of it.
I run everything through Alertsify now specifically because I don’t trust myself to make that sizing call in real time at 8:29am with a position already open and adrenaline doing the thinking. The copy execution doesn’t predict CPI any better than I can. What it does is take the “I’ll just hold a little bigger through the print, it’ll be fine” decision out of my hands, because that decision is the one that cost me $11,400 in year one and it’s the one that shows up again every single time volatility gets interesting.
Where I’m Sitting Tonight
Day 61 of not placing a single manual order. Came close to touching it around 2pm today when QQQ was bleeding faster than SPY and every instinct said add to the position. Didn’t. That’s the whole update — no prediction for tomorrow, no hot take on PPI, just a reminder to myself and anyone reading this that the night before a CPI print is not the night to get creative with size.
Tomorrow’s number is unknown. What’s known is that IV is elevated, QQQ already showed relative weakness today, and three red closes in a row tend to make traders want to do something they wouldn’t otherwise do. Sit with that before the open.
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