JUN · ISSUE 25 · June 18, 2026
FLOWS · ALERTThe Friday when flows run the tape
Quad witching tomorrow, plus a quarter-end rebalance set to sell $165bn of equities. Three bearish levers at once.
QUAD WITCHING
FRI 19
quarterly expiry
REBALANCE
$165bn
selling, most since 2022
VIX
18.44
+2 pts, neutral
THE NUMBER
$165bn
↓ net quarter-end equity selling
JP Morgan estimates the quarter-end rebalance will sell equities and buy bonds at the largest size since March 2022, right as the Q2 buyback blackout begins.
NUMBER
ZOOM IN$165bn
$165bn
▼ selling equities / buying bonds
It is like half the market emptying its cart at once on the same day the usual buyer is out of the office.
It is the heaviest quarter-end selling flow since March 2022, and it lands exactly when buybacks are on holiday.
- BUYBACK
- — When a company repurchases its own shares; it supports the price.
- REBALANCE
- — Periodic reset of large portfolios (funds, pensions).
CONTEXT
RULE OF THE DAYOn expiry day, flows run the show
“Four times a year, for a few hours, the market moves on what expires, not on what happens.”
On a quad witching day, price doesn't hunt for value: it hunts for the strike where the most money is trapped.
- STRIKE
- — An option's exercise price; a key level at expiry.
- FLOWS
- — Money moving for mechanical reasons, not opinion.
- EXPIRY
- — The date an option or future ceases to exist.
MECHANICS
ILLUSTRATIVEActivity spikes into Friday
Illustrative curve: derivatives pressure concentrates on expiry day.
As expiry approaches, derivatives volume piles up and the final day goes vertical.
- VOLUME
- — Number of contracts traded; a gauge of how intense activity is.
- DERIVATIVE
- — A contract whose price depends on another asset (option, future).
THREE FORCES
WHAT WEIGHSThree levers pushing lower at the same time
QUARTER-END REBALANCE
Funds and pensions sell equities and buy bonds to return to target weights. JP Morgan sizes it at $165bn, the heaviest selling since March 2022.
BUYBACK BLACKOUT
During earnings season companies cannot buy back stock. The buyer that supports the market almost every day disappears.
DERIVATIVES EXPIRY
Options, futures and index products expire together. Dealer hedges unwind and amplify the price move.
It isn't a headline: it is three flow mechanisms landing on the same Friday.
- DEALER
- — An intermediary that sells options and hedges by trading the underlying.
- HEDGE
- — A trade that neutralizes the risk of a position.
- BLACKOUT
- — Window when a company cannot repurchase its own shares.
BREAKDOWN
ILLUSTRATIVEWhere Friday's pressure comes from
Illustrative weights: on Friday money moves on mechanics, not conviction.
Illustrative breakdown of the mechanical forces tilting flow lower at expiry.
- GAMMA
- — An option sensitivity that forces the dealer to buy or sell more near expiry.
- STRIKE
- — The price an option expires at; price tends to gravitate toward it.
CALENDAR
NEXT 48HThe script for the quarterly expiry
| THU JUN 18 · after close | EXPIRY EVE | Medium | Positions adjust; volume builds ahead of Friday. |
| FRI JUN 19 · 09:30 ET | QUAD WITCHING OPEN | High | Index options, single-stock options and futures all expire. |
| FRI JUN 19 · 16:00 ET | REBALANCE ~$165bn | High | Selling equities, buying bonds; heaviest since Mar-2022. |
| FRI JUN 19 · ongoing | Q2 BUYBACK BLACKOUT | Medium | Companies cannot repurchase: a structural buyer is missing. |
| MON JUN 22 · open | POST-EXPIRY HANGOVER | Low | Dealer gamma resets; volatility usually eases. |
With the S&P below 7,500, these events can push it to 7,300 or pull it back to 7,600.
- QUAD WITCHING
- — Simultaneous expiry of 4 derivative types, 4 times a year.
- REBALANCE
- — Quarter-end reset that forces large buys and sells.
- GAMMA
- — The acceleration in dealer hedging near expiry.
CLOSE
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Daily briefing · Mon-Fri 16:00 ET
- QUAD WITCHING
- — Quarterly simultaneous expiry of options, index futures and stock futures.
- REBALANCE
- — Quarter-end reset of large portfolios.