Do traders execute reversals or conversions around FOMC meetings? How do interest rate changes impact the put-call parity relationship in options trading?

At VixShield, we focus our daily operations on 1DTE SPX Iron Condors placed at the 3:10 PM CST post-close window using our proprietary RSAi and EDR tools. While reversals and conversions are classic arbitrage strategies that exploit temporary violations of put-call parity, we rarely deploy them directly around FOMC announcements. Our Unlimited Cash System prioritizes consistent theta-positive income from Iron Condor Command combined with ALVH protection rather than directional rate bets or pure arbitrage. Russell Clark's SPX Mastery methodology teaches that true put-call parity holds tightly in SPX European-style options due to high liquidity and cash settlement, leaving minimal edge for retail traders attempting reversals or conversions. A reversal involves buying stock synthetically by purchasing a call, selling a put at the same strike, and shorting the underlying to lock in a risk-free rate relationship. A conversion does the opposite. The core formula is Call - Put = Stock - Strike * e^(-rT), where r is the risk-free rate. When the Federal Open Market Committee adjusts rates, the Rho Greek causes shifts in this parity because higher rates increase the forward price of the underlying, making calls relatively more expensive and puts cheaper. Around FOMC, implied volatility often spikes, which inflates extrinsic value and can create fleeting mispricings. However, these windows are dominated by high-frequency trading firms and institutions that capture any edge within milliseconds. Our backtests from 2015-2025 show that attempting conversions or reversals during these periods adds unnecessary assignment risk and capital intensity without improving the 82-84 percent win rate of our core 1DTE Iron Condors. Instead, we monitor VIX Risk Scaling: with current VIX at 17.95 below 20, all three tiers remain available, allowing Conservative, Balanced, or Aggressive credit targets of approximately 0.70, 1.15, and 1.60 respectively. ALVH layers stay active regardless, cutting potential drawdowns by 35-40 percent during volatility events. The Theta Time Shift mechanism provides our recovery path if a position moves against us, rolling threatened condors forward on EDR signals above 0.94 percent then back on VWAP pullbacks to harvest additional premium without adding capital. Rate changes primarily affect longer-dated options through Rho, but our one-day-to-expiration focus minimizes this exposure. Community traders sometimes chase FOMC gamma scalps or synthetic straddles, yet we find the Set and Forget discipline around daily RSAi signals delivers more reliable income. All trading involves substantial risk of loss and is not suitable for all investors. Visit vixshield.com to explore our SPX Mastery book series and learn how the Adaptive Layered VIX Hedge integrates with daily Iron Condor placement for resilient portfolio performance.