Jun. 20th, 2025 Option Outlook

Holiday whipsaw

Good Morning! On Thursday, the market whipsawed, but ended relatively flat.

The concerns about the delayed settlement for options expiration turned out to be true, as the market whipsawed 100 points in the closed session in 20-30 point bursts. However, the buying and selling strength evened out, and we are opening flat on the day. The buying last night theoretically was from Trump giving a 2 week pause on Iranian strikes, but like Israel’s initial attack, that might be designed to give Iran a false sense of security. As the old saying goes, the first casualty of war is the truth. Today is triple witching, which is usually a calm day. What does the market look like for opex?

Today’s charm outlook is actually a bit bearish down as far as 5950. This was the declared “slowdown” area for the holiday weekend, and that turned out to be true, bottoming at the SPX equivalent of 5920. We have since bounced back to this region. Today might be calm, but if the market moves in a direction, the likely direction based on today’s expiration is down.

Next week is also negative vanna, reinforcing the fact that we are likely to decline in the near term.

I will save my July opex outlook for the monthly opex paid substack, but the quick preview is that it doesn’t look good. There is so much premium selling on puts by customers on many tenors that it spells a scary situation for markets in the near and intermediate term.