CPI Tomorrow: How to Trade a Big Nasdaq Move Without Picking a Direction
How a long strangle works around a big event like a CPI release: buy an out-of-the-money call and put, profit from a large move either way, and lose at most the premium if nothing happens. Worked example on Nasdaq-100 micro options (XND): 314 call + 300 put for about $250.
Recorded on 13 October 2026, the day before the September CPI release. This is a lesson on how the structure works, not a trade recommendation; prices are approximate and were valid only at the time of recording.
The situation
Tech was wobbling: the Nasdaq-100 had come off its highs after an AI and chip sell-off, and the CPI inflation report was due on Wednesday. When a big number is coming and you have no view on the direction, one structure is built exactly for that situation: the long strangle.
The structure
On Nasdaq-100 micro options (XND = Nasdaq-100 ÷ 100; with the index near 30,700, XND was about 307):
- Buy the 314 call: profits on a big move up
- Buy the 300 put: profits on a big move down
- Expiry: Friday, 16 October
- Cost: about $2.50 per share, $250 in total
Both options are out of the money, which is what makes a strangle cheaper than a straddle (buying the call and put at the same strike).
How it pays
- A big move either way → profit, with no cap on the upside.
- XND stays between 300 and 314 → you lose up to the $250 paid.
- Breakevens: about 297.5 (300 − 2.50) and 316.5 (314 + 2.50) at expiry.
- Max loss: the premium paid, $250. Nothing more.
What could move the market that week
- CPI inflation (Wednesday)
- Bank earnings (Tuesday–Wednesday)
- Retail sales and PPI
- Monthly options expiry (Friday)
The catch: time decay
Time decay works against the buyer. If CPI turns out to be a non-event, the premium melts, often fast after the news, as implied volatility drops once the uncertainty is gone. A strangle needs the move to be bigger than what the option prices already expect, not just a move.
In three lines
- Buy an out-of-the-money call and an out-of-the-money put on the same expiry.
- A large move either way pays; a quiet market costs you the premium.
- Max loss = what you paid, so size it small.
Educational content, not personalised investment advice. Options carry significant risk and are not suitable for all investors; you can lose the entire premium paid.
Every trade on our own account is published after it closes, losses first: Our trades.