Sign Up Log in

    European stocks opened quietly, with major indices experiencing declines ahead of the Fed decision.

    by VT Markets
    /
    Sep 16, 2025

    European Market Prepares

    European markets are starting off slowly, causing traders to pause before significant economic events. This kind of price fluctuation often signals opportunities for strategies that can benefit from increased volatility. Today, derivative traders should focus on positioning for the US retail sales data and the Federal Reserve’s interest rate decision tomorrow. The retail sales figures from the US are critical and could influence the Fed’s meeting. A strong report may raise concerns about a more assertive central bank, putting pressure on the markets. We’ve seen this happen before in 2023, where solid economic data led to quick sell-offs in stocks as expectations for interest rate hikes grew. As uncertainty mounts ahead of the Fed’s announcement, demand for options is rising. The VIX index, which measures anticipated volatility, has jumped to 18.2 this week, up from a low of 15.6 last month. This indicates that traders are purchasing protection with puts or are preparing for a significant price movement using straddles.

    Market Reactions and Strategies

    The decline in European indices like the DAX and FTSE MIB is linked to the anticipation of the Fed’s next steps. In previous instances, European markets reacted more strongly than US markets to the Fed’s tightening policies. Therefore, using options on the Euro Stoxx 50 can be a smart way to hedge or speculate on the potential impact of tomorrow’s US monetary policy decision across Europe. Once the Fed makes its announcement, much of the anticipated volatility is expected to diminish. This “volatility crush” offers a chance for those selling options premiums. We might then consider strategies like iron condors on major indices to benefit from the market settling into a more defined range in the following weeks. Create your live VT Markets account and start trading now.

    here to set up a live account on VT Markets now

    In This Article

    see more

    Back To Top
    server
    Click Click Click Click Click
    Follow us on

    Hello there 👋

    How can I help you?

    Chat with our team instantly

    Live Chat

    Start a live conversation through...

    • Telegram
      hold On hold
    • Coming Soon...

    Hello there 👋

    How can I help you?

    telegram

    Scan the QR code with your smartphone to start a chat with us, or click here.

    Don’t have the Telegram App or Desktop installed? Use Web Telegram instead.

    QR code