Options traders are bracing for what could be a very busy few days as a number of potentially market-moving developments are being crammed into a shortened four-day trading week.
Activity in the options market has been off the charts so far in 2026, with investors piling into bullish call options tied to hot semiconductor names and other high-flying stocks. This has helped push stocks higher, but it also leaves the market prone to sharp pullbacks, like what investors witnessed in the $1.8 trillion selloff on June 5, derivatives-market experts told MarketWatch.
“The combination of heightened geopolitical developments, the start of the Kevin Warsh Fed era and the upcoming launch of SpaceX options has made for an unusually busy, shortened trading week in a year already marked by record options activity,” said JJ Kinahan, senior vice president at Cboe Global Markets, a major U.S. options exchange operator.
The first major event on the calendar: Contracts tied to SpaceX are due to start trading on Tuesday, according to a representative from Cboe.
Options tied to Tesla, the other publicly traded company controlled by Elon Musk, have for years consistently ranked among the most heavily traded single-name contracts in the entire U.S. market. Many expect contracts tied to SpaceX could be just as popular, given the frenzy of demand for shares among retail traders, according to Daniel Roos, the founder of options-tracking and modeling platform VolSignals.
“I’ve already seen people writing that we should expect a gamma squeeze,” Roos told MarketWatch. A “gamma squeeze” happens when aggressive buying of bullish call options creates a self-fulfilling feedback loop, with market makers inadvertently pushing the value of the underlying asset higher while scrambling to hedge their positions.
Investors will also be closely watching high-profile central-bank meetings this week, including Federal Reserve Chair Kevin Warsh’s first press conference as the head of the central bank on Wednesday.
Traders of options tied to the S&P 500 were recently pricing in a roughly 70-basis-point swing in either direction, according to Danny Kirsch, head of options at Piper Sandler. That is a notably larger swing than what had been priced in ahead of other recent Fed meetings, Kirsch said.
Before investors hear from Warsh, they will hear from senior officials at the Bank of Japan, who will be wrapping up their June monetary-policy meeting on Wednesday in Tokyo.
Traders will be closely monitoring Warsh’s commentary to see if he decides to play down the risk that sharper inflation could pressure the central bank to hike rates, Cboe’s Kinahan said. Data released earlier this month showed inflation in the U.S. rose at the fastest pace since 2023 in May.
‘Triple witching’
The latest quarterly “triple witching” — when options tied to indexes, individual stocks and ETFs expire alongside futures contracts tied to indexes like the S&P 500 — is set to take place on Thursday. Triple witchings usually take place on Fridays, but the stock market will be closed on Friday for the Juneteenth holiday.
As the latest quarterly witching approaches, the U.S. equity market’s relentless climb higher since the start of April has left market makers in a difficult position. According to data from SpotGamma, their hedging demands this week could exacerbate stock-market swings in either direction.
That leaves the market without much of a buffer against another outbreak of volatility should Warsh happen to say something unexpected on Wednesday, according to Brent Kochuba, founder of SpotGamma.
The S&P 500’s quarterly rebalancing will take effect on Thursday at the close, which could trigger some volatility as index-tracking funds adjust their holdings. Marvell Technology and electronics manufacturer Flex will be joining the index, while Pool and Campbell’s are due to depart.
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