Founder of derivatives analysis company Asym500, RockyFishman, estimates that around $2.2 trillion worth of longer-term options contracts tied to stocks and indexes are set to expire on Friday.
Investors must decide whether to roll over the options or establish new positions – a process that could lead to a significant surge in trading volume and potentially result in sudden price fluctuations.
This OpEx event (options expiration) comes at a pivotal moment – the strong upward momentum of the S&P 500 index this year is starting to waver as bets on a robust U.S. economy force the Federal Reserve to consider raising interest rates further.
While options expiration events often provide a liquidity window for those looking to reshuffle large positions, they also add another layer of complexity to the already unpredictable stock market – one prone to intraday sell-offs and frequent reversals.
Furthermore, traders face the larger challenge of the current proliferation of zero-day-to-expiration (0DTE) options and recent changes in market makers’ positions.
