U.S. stocks are already shaking off their losses from earlier this week.
Many investors are worried that the ongoing conflict with Iran might provoke more volatility in financial markets. Data shows that demand for bearish put options, which protect equity portfolios from short-term pain, has increased.
But one prominent Wall Street strategist said he believes that the worst of the fallout from the fighting is probably over for now, at least in U.S. equities.
In commentary posted online, Citadel’s Scott Rubner — who made his name as a tactical strategist at Goldman Sachs — laid out his argument using a number of charts, a few of which we have shared here.
“We take off our tactical bearish call and see scope for a bounce into mid-month, with volatility normalization acting as a catalyst. Expect chop into OpEx and greater flexibility thereafter, with April offering a more durable re-risking window,” Rubner said in commentary shared online.
That’s a fancy way of saying Rubner expects stocks to eventually move higher. However, his bullish thesis hinges on the March options expiration, set for March 20. The latest quarterly “Triple Witching” event could be one of the biggest on record, according to Citadel data.
OpEx and the ‘Triple Witching’
Roughly 35% of outstanding U.S. options exposure is set to roll off by March 20, when contracts tied to indexes, individual stocks and ETFs and index futures are due to expire on the same day. This happens once a quarter, and markets professionals call it “Triple Witching.”
According to Rubner, contracts tied to $5 trillion in underlying value will go up in smoke that day, although that figure could fluctuate between now and then. Typically, those who buy options contracts pay just a fraction of the value of shares that the contract controls.
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As contracts expire, market makers who have sold the contracts can adjust their hedges in a way that could enable the S&P 500 to finally move higher, Rubner said.
Lately, the index has been choppy, while making little to no forward progress. Rubner illustrated this in a chart showing the total magnitude of fluctuations in the index compared with its year-to-date return. After these options expire, Rubner believes the S&P 500 will have more flexibility to move higher.
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Retail investors continue buying the dip
Individual investors have remained a dominant force in the U.S. equity market, helping to put a floor under stocks. Even when software names were getting clobbered, retail traders stepped up and bought the dip, according to Vanda Research.
Citadel showed that retail participation has remained just as critical to the market’s overall health this year as it was in 2025.
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“Retail’s appetite to buy the dip has remained a dominant force in early 2026 flows. Year to date, average net notional traded on our platform has been 2.5x larger on S&P down days than on up days,” Rubner said.
“While overall average daily net notional moderated in February, the intensity of dip-buying actually increased.”
Retail inflows hit a monthly record in January, and remained strong in February relative to history.
Tax refunds
Tax refunds have a strong track record of filtering into risky assets like stocks, Rubner said. Refund issuance usually begins to accelerate in late February, and the total sum doled out to consumers is expected to be unusually large this year, due to President Donald Trump’s tax breaks.
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Too much skew
Looking at the options market, there are signs that demand for downside protection has been extremely robust.
That shouldn’t be much of a surprise. But investors might not be aware of the fact that extreme positioning in the options market can sometimes portend a reversal of fortune ahead.
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Any positive news could inspire options traders to start monetizing their hedges, which would create even more upward pressure on stocks.
Cross-asset volatility is picking up
U.S. stocks aren’t the only asset class seeing big swings lately. From bonds to oil, gauges of cross-asset volatility have been picking up.
One gauge, known as the ICE BofAML MOVE Index, touched its highest level since late last year.
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That should create more opportunities for algorithmic funds, which use implied volatility gauges as key inputs in their models. Often, funds will de-lever as volatility rises, and start re-levering, or shorting volatility, once it appears to have peaked.
Seasonals are looking more favorable
March and April have a much stronger track record for stocks than February.
S&P 500 seasonals going back to 1928 show the index tends to see strong performance in March and April, coupled with positive-return rates north of 60%. February has a much lower positive-return rate, and a negative average return.
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The S&P 500 gained 0.8% to end at 6,869.50 on Wednesday, while the Nasdaq Composite jumped 1.3% to finish at 22,807.48. The Dow Jones Industrial Average added 238.14 points, or 0.5%, closing at 48,739.41.