Unit 4 · Level 3 · Reading the macro calendar
Positioning around events
The Trading course taught the mechanics; here's the macro version. Before a big print, option prices inflate with expected drama. Once the event passes, that implied volatility collapses ('IV crush'), so you can be right on direction and still lose on options. Pros usually cut position size before binary events rather than bet bigger. Nobody reliably predicts the print; the edge is surviving it.
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What you get asked
'IV crush' is:
Options carry an uncertainty premium into the event; when the uncertainty resolves, that premium evaporates, whatever direction prices took.
You buy a call before CPI. The print is good and the stock rises a little, yet your option loses money. Why?
You paid event-inflated premium; the small move didn't cover what the IV collapse took away. Right on direction, wrong on price, a classic options lesson.
Ahead of a binary event, prudent traders usually ___ their position size.
A print can gap through your stop before it triggers. Smaller size, in the spirit of the Trading course's 1% rule, is the honest defence.
Order the honest event-day playbook
Notice what's missing: guessing the number. The playbook manages exposure to the surprise instead of pretending to foresee it.
What separates pros from gamblers around big prints?
The print is a coin you can't see; sizing is the hand you control. Survive enough events and the skill you've built gets time to pay. 🐜
The rest of this unit
CPI day, Fed day, jobs day: learn to read the week's big prints like the pros do.