Historical trends of CPI data and how I plan to trade it via /r/wallstreetbets #stocks #wallstreetbets #investing


Historical trends of CPI data and how I plan to trade it

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Of the last 8 CPI days.. we have seen SPY open up red 5 out of 8 times and of those 5 times 4 out of the 5 times have been >1% red. Of the 3 out of 8 times that have been green two have opened less than 1% green and one opened 1.8% green.

Of the last 8 CPIs the two days before CPI releases is averaging a total drop from open to close of -0.75%… however, if we look at the last five CPIs (April, May, June and July) we are averaging a two day drop of -2.19%.

Intraday movement the day before CPI

The January 11th, February 10th, March 9th and August 10th (days before CPI) were all considered flat days. However, When we look at the four CPI days (April, May, June and July) all four of them have had pretty significant dumps from about 1pm to close. If you had bought puts around 1pm almost all four of these days you would have ended up extremely profitable.

The average drop of those four CPIs from 1pm till EOD is 1.425% with the smallest being 0.8% in April and the most being 2.3% in June.

Intraday puts are almost certainly the play once the morning chop is over… only if there is a bigger 1pm sell off that starts.

So whats the play? How am I going to play CPI?

Remembering like FOMC I trade off the data I have analyzed and what the highest probability risk to reward is… I will be opening a Wednesday expiration put ATM Monday (the day before CPI) before market closes at 415pm (alternatively you could open a 0dte SPX or ES instead).

An ATM put would be a better play if you think you could be wrong and we could pop. However, if you suspect youll pick the correct direction a 3-5OTM put would be the biggest gainer for a huge IV pump at open that should be expected.

I would be hesitant to hold any puts past open just because of how previous CPIs have played out. If I happened to be wrong on that 0dte put play I would immediately sell at market open without hesitation.

I am also currently holding a 9/21 390p that I plan to average down sometime before Thursday. The reason I am trading this is based off the historical drop leading up to CPI and the fact that the week prior to FOMC (which is also CPI week) usually see a sell off of about 4.2% over the week before hand. The goal with this put is to close it the day before FOMC (Tuesday the 20th).

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One thing to keep in mind as I write this… is that there is NO forecast for CPI currently… which is very odd as last time I wrote this same thread there was a forecast and it got revised… IF forecast/ consensus come in low such as 8.0 to 8.2 I would be very hesitant to play puts over night.

On one hand we have every fed member, jpow and even the president saying inflation is not peaked but the fact a consensus is not out is very sus…. IF the consensus/ forecast come in over that 8.5% I would feel confident in puts… or at least the risk to reward of puts overnight.

If we were to see the President/ the feds front run this with a presser i would feel even more confident in puts.

Submitted September 08, 2022 at 02:26AM by DaddyDersch
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