These trends are about to reverse in a big way?

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The S&P 500 has posted a trend reversal within three trading sessions of each monthly OpEx since January. January’s expiration preceded a 4.2 percent rally. February flipped the tape into a two-week slide. March reversed higher again. April’s OpEx marked the top. May’s expiration triggered a breakout. June’s expiration just printed, and the market is already pivoting.

The mechanics are simple. Options expiration forces dealers to unwind hedges. That means buying or selling underlying shares to flatten exposure. When open interest is large and skewed, the unwind can move the index. In 2025, open interest has been massive. The notional value of SPX options expiring each month has averaged over $1.2 trillion, according to CBOE data. That’s not a tail wagging the dog. That’s the dog.

The effect is strongest in months with high gamma exposure. April and June saw record levels of dealer short gamma, meaning dealers had to chase price into expiration. That creates volatility. It also creates opportunity. Traders who front-run the unwind have been rewarded. The average move in SPX during OpEx week this year is 1.8 percent, nearly double the 10-year average.






Sources:

https://www.quantifiedstrategies.com/the-option-expiration-week-effect/ https://www.schaeffersresearch.com/content/analysis/2025/05/05/why-the-spx-could-be-on-the-cusp-of-major-upside https://www.macroption.com/options-expiration-calendar/