Traders brace for heightened volatility in US stock market

A record $6.5 trillion worth of US stock options are set to expire on Friday, marking one of the largest events of this kind in recent years. Despite the relative calm observed since early May, analysts warn that such a move could trigger sharp market swings in the coming week, Bloomberg reports.

Rocky Fishman, a founder of Asym 500, attributes the recent subdued volatility to the "pinning effect", with options expiration temporarily stabilizing prices. However, President Trump’s tariffs on key US trading partners have prompted bearish investors to hedge against potential stock market declines. Fishman believes the $6,000 threshold was widely viewed as a key resistance level for the S&P 500 Index.

Matthew Thompson, a portfolio manager at Little Harbor Advisors, says many traders were forced to sell assets during the tariff-induced dip, only to buy them back later, thus amplifying price fluctuations. With these contracts now expiring, the market could see fewer constraints, potentially leading to more pronounced upward or downward price movements.