Opinion: Tens of trillions of dollars in options expiring will trigger two weeks of volatility in the US stock market

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Mars Finance News, on June 18th, Castle Securities' stock and stock derivatives strategy chief Scott Lubna stated that the U.S. stock market may experience a period of increased volatility in the next two weeks, but this is more due to technical factors rather than fundamental changes. He pointed out that starting from June 19th, the market will face the largest options expiration in history, combined with quarterly pension portfolio rebalancing and concentrated adjustments in major investor positions.
He called this phase one of the "most critical technical periods of the year," where the importance of capital flows will be significantly higher than fundamental factors.
Despite short-term disturbances, Lubna still recommends investors view volatility as a "technical phenomenon" and to buy on dips during market pullbacks.
He believes that once the next two weeks and the quarter-end are past, the market environment will improve significantly.
Lubna said that retail investor behavior is changing: "Unlike in the past, when they only chased high-risk assets, retail investors are increasingly focusing on companies aligned with institutional allocations that can drive benchmark index performance."
More importantly, U.S. households currently hold record levels of cash, waiting to enter the market during a correction.
He pointed out that this capital characteristic usually only changes when the Chicago Board Options Exchange Volatility Index (VIX) rises above 30, but currently, the VIX is about 16, still at a relatively low level.
Supported by multiple sources of funds, Lubna judges that "the main theme in the U.S. stock market in the second half of the year will still be upward."
VIX-3.14%
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