Nasdaq 100 Sentiment Shifts to Bullish as Long Positions Reopen

U.S. equities posted a 16% gain in 2025, driven by the AI surge, steady consumer spending and a trio of rate cuts in the year’s final quarter. As 2026 unfolds, investors are sharpening their focus on a mix of geopolitical flashpoints—from Venezuela to Greenland to Iran—and the impending Federal Reserve Chair transition from Powell to Warsh this May.

Trade‑policy uncertainty, the U.S. labor market, inflation and the mid‑term elections also loom as potential volatility catalysts. Even a single geopolitical event can ripple through markets, prompting rapid repositioning.

In January, short‑dated at‑the‑money (ATM) implied volatility in E‑mini S&P 500 (ES) options spiked from 9.75% to 11.31% after U.S. action in Venezuela, and later leapt from 10.49% to 16.50% following U.S.‑EU trade tensions over Greenland. Some investors used these spikes to hedge portfolios with defensive puts, while others chased new opportunities.

A snapshot of equity‑index options for the January‑February, March and June 2026 expiries shows a clear evolution. The market began the month with a defensive stance across all maturities, but by January 30 it had pivoted toward aggressive upside speculation. Short‑term positions remained heavily hedged at lower levels, yet the March and June expiries revealed a bullish tilt, with traders targeting levels above 8,000.

By March 4, traders preparing for June were placing deep out‑of‑the‑money (OTM) hedges at 4,850 and 5,000, signalling heightened institutional demand for downside protection amid ongoing geopolitical developments. Simultaneously, bullish speculators were aiming for a climb into the 7,400–8,100 range.

With a dense calendar of events early in 2026, the ability to adjust exposures in real time—both during U.S. and non‑U.S. trading hours—remains vital. Average daily volume for equity‑index options outside U.S. hours surpassed 200,000 contracts in December 2025, representing 16% of the total daily options volume as global institutions manage risk around the clock.

Looking ahead, June ATM implied volatility is once again below its long‑term average, trading at levels comparable to 2025. The trade‑policy and geopolitical uncertainty that dominated the first half of 2025 pushed options premiums and ATM volatility higher, setting the stage for a cautious yet opportunistic market outlook.