Options Report: Hedge-Fund Manager Studies the CPI Report For Tuning Short Strangles in S&P 500 Options
NEW YORK -- While many traders speculate on earnings reports, hedge-fund manager Kyle Rosen waits for the Consumer Price Index report.</br></br>By today's opening bell, he will know how to adjust his short strangles in the Standard & Poor's 500 options to best capitalize on the stock market's reaction to the inflation report.</br></br>"I think that could set the tone, at least for a few days. We seem to be locked in this temporary equilibrium, and the CPI could determine which way we move," Mr. Rosen, president of Rosen Capital Management, said.</br></br>The market could break out of its trading range if the CPI report meets expectations, but it also could remain range bound between 1385 and 1407 on the S&P 500 if the number is out of line, Mr. Rosen said.</br></br>A short strangle -- selling a call with a high strike price and selling a put with a low strike price -- gives Mr. Rosen the flexibility to quickly respond to the market.