The market just got a surprise visitor it was hoping had left the party.
After a delay caused by the government shutdown, Friday’s inflation data finally came out — and yeah, it was up.
Year-over-year prices jumped 3%. Same with Core PCE inflation.
And the timing couldn’t be more awkward.
With the Fed set to make its final rate decision of the year this coming Wednesday, this late print just threw a wrench into the “rate cut parade” Wall Street’s been pricing in.
If you’ve been selling premium or playing directional trades off the idea that the Fed’s already pivoted, you need to pay attention right now.
This is a direct challenge to the narrative that the Fed is done and 2026 is all green lights.
The FOMC doesn’t meet again until the end of January.
So what they say and how they say it Wednesday will shape everything from equity flows to implied volatility until then.
Here’s what to keep in mind.
Smoke Signals
Options are already telling us something.
Implied volatility is ticking up ahead of the meeting, and we’re starting to see traders pay up for protection on both sides.
That means skew is coming back into play.
This isn’t a “buy the dip” setup — it’s a “prepare for movement” moment.
You can position around the reaction, not the prediction.
If the Fed stays higher for longer, even just a little, that could reprice everything from tech to Treasuries.
On the other hand, if they brush off the inflation pop and stick with “inflation is coming down,” we could see a melt-up into year-end as funds chase returns into December 31.
The better play here isn’t to guess the direction — it’s to structure your trades so you win if the market moves big either way.
That’s the edge options give you when everyone else is stuck hoping they’re right.
Reality, Not Hype
Don’t ignore the calendar, either.
This isn’t just the last meeting of the year, it’s also the last chance for the Fed to steer expectations before earnings season ramps up and 2026 money flows begin.
Whatever tone they set, it will echo for weeks.
If you’re trading short-term options, keep a close eye on the implied moves being priced into weekly contracts.
Market makers are already building in extra juice.
That tells you the risk isn’t just hype.
And if you’re working with longer-dated options, this is the window to think about how rate expectations could shift volatility curves across sectors.
Financials, tech, and rate-sensitive names are going to move differently based on what the Fed does, and options let you isolate that exposure without going all-in on a directional bet.
Stay Street Smart,
Jeff Zananiri
