MW A 'volatility spasm' is set to provide the toughest test yet to the 9-week-old stock-market rally

By Jamie Chisholm

A bunch of catalysts this month could cause tremors in the market, says SpotGamma

June may deliver a burst of volatility to the markets.

The new month sees U.S. stocks at record highs as an inexorable rally rumbles on. The S&P 500 SPX has registered a nine-week winning streak during which it has bounced 19%, the best such run since May 2020.

However, SpotGamma, the options-market analysis company, warns that there are a number of events occurring in the middle of June that pose a threat to the resolute bullishness.

"The catalyst-dense June calendar is where we are carefully watching for the next volatility spasm," said the SpotGamma team in a note published Sunday.

They highlight that the U.S. consumer-price index data for May will be released on June 10, an increasingly pertinent issue for investors amid a spike in energy costs caused by the Iran war.

An IPO from SpaceX is expected around June 12. "Russell recently announced changes that would allow SpaceX to be added to its indexes no sooner than five days after the IPO," says SpotGamma.

"Similar adjustments may eventually occur in other major indices. As a result, the $1.8 trillion inclusion could add additional volatility to the market," they add.

Then, on June 17, the first Federal Reserve policy decision overseen by the new chair, Kevin Warsh, will be announced. That's followed a day later by June options expiration, which takes place on a Thursday, and not the typical Friday, when markets will be closed for the Juneteenth holiday.

Options give the buyer the right to buy (a call option) or sell (a put option) an underlying asset at a particular price by a particular time. This June's expiration is what's known as quadruple witching, when contracts for stock options, index options, index futures and single-stock futures expire simultaneously.

Together, these events "will deliver possibly the greatest test yet to this rally," says SpotGamma, which makes note of signs of excess and fragility within the market.

Areas of concern include "stretched bullish positioning" across many artificial-intelligence stocks, with several displaying a skew rank above 90%. That indicates calls are priced relatively high compared with puts of the same expiration, an indication investors are very optimistic.

Should profit taking begin, a sharp pullback would be in the cards as extreme call demand unwinds, says SpotGamma.

A look at options action shows some investors are already starting to hedge for the possibility of increased uncertainty as June progresses. SpotGamma says it's seen notable flows into strategies such as iShares Russell 2000 ETF IWM puts, which is a bearish bet on small caps, and trades that would benefit from a dip in the State Street SPDR S&P 500 ETF SPY and a rise in the Cboe Volatility index VIX.

One trade that stood out to SpotGamma was a 15,000 lot June/July put diagonal spread on the S&P 500 Mini-SPX Options Index XX:XSP, an index designed to track one-tenths of the value of the standard S&P 500.

SpotGamma explains that a put diagonal spread combines the sale of a shorter-dated put with the purchase of a longer-dated put at a different strike price. The strategy can benefit from a gradual decline in price and/or an increase in back-month implied volatility relative to front-month volatility.

"In simple terms, the trader is buying downside protections for July and funding most of it by selling June puts," says SpotGamma.

The markets

U.S. stock-indices SPX DJIA COMP are lower at the opening bell on Wall Street as Treasury yields BX:TMUBMUSD10Y jump. The dollar index DXY is a higher, as gold futures (GC00) trade around $4,534 an ounce.

 
Key asset performance                                                Last       5d      1m       YTD     1y 
S&P 500                                                              7580.06    1.43%   4.84%    10.73%  28.22% 
Nasdaq Composite                                                     26,972.62  2.39%   7.40%    16.05%  41.12% 
10-year Treasury                                                     4.473      -9.00   3.10     30.10   2.30 
Gold                                                                 4533       0.50%   0.01%    4.64%   33.07% 
Oil                                                                  91.01      -6.18%  -13.44%  58.53%  44.37% 
Data: MarketWatch. Treasury yields change expressed in basis points 

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The buzz

Oil prices (CL.1) (BRN00) jumped after the U.S. and Iran exchanged strikes over the weekend and Tehran was later reported to say it would cut off talks.

Berkshire Hathaway $(BRK.B)$ agreed to buy home builder Taylor Morrison Home (TMHC) for $8.5 billion, one of the first big deals under CEO Greg Abel, who succeeded Warren Buffett in January.

Nvidia shares (NVDA) are up, while shares of Intel $(INTC)$, Qualcomm $(QCOM)$ and Advanced Micro Devices $(AMD)$ are lower, after the former unveiled an AI chip designed for personal computers.

A 14% share surge saw SoftBank Group (JP:9984) pass Toyota (JP:7203) to become Japan's most valuable company.

Strategy shares (MSTR) are sliding after the digital asset treasury company said it had sold a small slice of its bitcoin holding.

Shares of MGM Resorts International (MGM) are jumping after a report Barry Diller's media conglomerate People Inc. is readying an $18 billion offer for the casino group.

Former Fed Chair Jerome Powell on Sunday called the Federal Reserve's independence "a priceless asset" that must be protected.

U.S. economic data due Monday include the S&P final U.S. manufacturing PMI for May at 9:45 a.m. Eastern time, followed 15 minutes later by the May ISM manufacturing report.

Hewlett Packard Enterprise $(HPE)$ will release earnings after Monday's closing bell.

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The chart

Ryan Detrick, chief market strategist at Carson Group, notes in an X post that in the last 75 years the S&P 500 has not seen its ultimate peak of the year occur in June. Of course, this may mean that there are further highs to come this year - or that the high for the 2026 was in May.

Top tickers

Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.

 
Ticker  Security name 
NVDA    Nvidia 
MU      Micron Technology 
TSLA    Tesla 
AMD     Advanced Micro Devices 
INTC    Intel 
MSFT    Microsoft 
TSM     Taiwan Semiconductor Manufacturing 
SPCE    Virgin Galactic 
PLTR    Palantir Technologies 
AAPL    Apple 

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Beyond the newsroom

MarketWatch Picks: Some CDs are still paying 4% and 5% APYs and up - and these are the 8 questions to ask before you lock in.

-Jamie Chisholm

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June 01, 2026 09:31 ET (13:31 GMT)

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