SPY Options Today: The Day After the FOMC Rally
· 5 min read
Six years doing this and I still check the two-day chart before I check anything else on a morning like today. Not because it tells me what’s coming. Because it tells me what everyone holding options just lived through, and that’s usually more useful than any forecast.
SPY closed Monday at $757.39. Then came the FOMC day — open at $759.50, a swing up to $761.67, a drop down to $749.60, and a close at $754.05. That’s a $12 range on the index in one session. If you were short premium into that, you felt every tick of it whether you looked at your screen or not. Then today: open $763.15, high $763.57, low $759.96, close $762.70, up 1.15% and closing right near the day’s high. QQQ did the same thing — flat-ish, wide-range chop on decision day, then a clean 1.73% push today, also closing near its high.
That sequence — wide range and roughly flat, followed by a strong one-day follow-through — is the part I want to talk about, because it’s not the part people usually write about the day after a Fed decision.
What actually happens to IV the day after
The standard story is simple: the event passes, the uncertainty resolves, implied vol gets crushed, everyone who sold premium into the decision collects. That’s true often enough that people stop checking whether it’s true this time.
But vol crush isn’t really about the calendar turning the page. It’s about whether the market believes the move is finished. A quiet, low-range day after a big decision tells premium sellers the uncertainty is gone — IV settles down fast, sometimes within hours of the open. A day like today, where the index doesn’t just hold the prior move but adds another full percent and keeps grinding to new highs into the close, tells a different story. Some of that vol crush still happens, because the event itself is behind us. But the follow-through can keep IV from collapsing as hard as the calendar alone would suggest, because now there’s a second question on the table — is this rally done, or is it just getting started — and the market has to price both.
I’ve watched this exact pattern before. A rough FOMC day followed by a clean rally day usually means the vol curve doesn’t flatten out cleanly. It gets lopsided. The crush happens on the downside skew because the immediate fear is gone, but at-the-money and upside vol stays sticky longer than people expect, because a one-day rally isn’t the same thing as a resolved trend.
What holding through both days actually cost you
If you had anything short-dated open across Monday through today, you already know the answer without me telling you. The decision day alone gave you a $12 range on SPY. Anyone short a tight strangle got tested on both sides in the same session — pushed toward the low around 2pm ET, then yanked back toward the high by the close. That’s the kind of day where being right about direction and still losing money on theta decay assumptions is completely normal. It’s not a mistake. It’s what a binary-event day does to a position built for a calmer market.
Then today built on top of that. A trader who closed everything out after the FOMC day and reopened fresh this morning had a much easier time than someone who let a position ride through both sessions. The first group faced one clean, high-conviction rally day. The second group is now sitting on a position that survived a whipsaw and then got dragged into a trend — and those require different exits. A credit spread sized for decision-day chop is not sized for a two-day, 1%+ back-to-back move.
None of this is a case for prediction. It’s a case for sizing before the event, not during it. The trades that worked this week weren’t the ones that called the direction right. They were the ones sized small enough on decision day that today’s follow-through was a bonus instead of a scramble.
Why tomorrow’s data is the smaller story
Tomorrow brings Industrial Production, Capacity Utilization, and the CB Leading Index, plus two Fed speakers on the calendar. On a normal week, that’s a full slate. This week, it’s noise sitting on top of signal. Industrial Production printing in line with a 0.3% forecast against a 0.2% prior isn’t going to erase a week that included a $12 range on SPY and back-to-back sessions moving in opposite directions before landing on a strong close.
The market just spent two days repricing itself around a major decision. Whatever tomorrow’s secondary data does, it’s working against a backdrop that’s already been reset. I’m not fading low-impact prints just because they’re on the calendar — I’m sizing them like what they are, which is smaller than what already happened.
Where I sit going into tomorrow
Year 1 of doing this, I lost $11,400 trying to trade every headline the same size. Year 2 I broke even because I finally started asking what a given day’s data actually deserved in terms of position size, not just whether it was on the calendar. Years 3 through 6, that’s the difference that’s kept me profitable — not calling the Fed right, just not treating every print like it’s the print.
Today wasn’t a day to guess what happens next. It was a day to notice what already happened — a rough decision session, a strong follow-through, and a vol curve that’s going to take longer to settle than the headlines suggest. Alertsify is how I stop myself from overriding that with a gut feeling at 9:31am. The signal handles the sizing discipline I don’t always trust myself to hold on a week like this one.
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