The United States Bureau of Economic Analysis (BEA) will release its first estimate of the Gross Domestic Product (GDP) for the third quarter. This report is coming out on Tuesday at 13:30 GMT. Analysts expect an annualized growth rate of 3.2%, following a 3.8% growth in the previous quarter.

Expected Economic Growth

Today’s GDP estimate will show if the economy is slowing down as expected. The market forecasts a growth rate of 3.2%, lower than the 3.8% recorded in the second quarter. This number is important because it will either support or dispute the ongoing soft-landing narrative. If the GDP estimate is close to 3.2%, we may see limited market reactions, particularly due to lower trading activity during the holiday season. In this case, selling weekly options strangles on indices like SPY could be a good strategy to take advantage of low volatility and time decay. Keep in mind that even small trades can influence the market this week, resulting in exaggerated reactions. If the report shows a stronger growth rate, above 3.5%, it could unsettle the market by indicating that inflation might be persistent. This would make us rethink the Federal Reserve’s planned easing in early 2026, especially after their indecisive stance during the December 17th, 2025 meeting. Traders may consider buying VIX call options or puts on rate-sensitive futures like the Nasdaq 100 if this happens. On the other hand, if the GDP comes in below 2.8%, it could signal a sharper slowdown, raising worries about a recession. This outcome would likely increase bond prices and might lead to buying call options on Treasury bond ETFs. The recent inflation report showing 2.8% year-over-year in November makes this a realistic concern.

Market Implications and Strategy

The CBOE Volatility Index (VIX) has been around a low of 13, suggesting the market isn’t expecting any major surprises. This creates an opportunity to buy cheap, out-of-the-money options on major indices as a low-cost hedge against unexpected market movements. Any sudden shifts could be amplified by low liquidity as we approach Christmas. As we look to the early weeks of January 2026, today’s GDP number will set the stage for what’s ahead. We will use this information to prepare for upcoming inflation and employment reports. Options that expire in February 2026 could be a strategic choice for anticipating the market’s response to the forthcoming Q4 data and the next Fed meeting. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now