Any shifts in geopolitical flashpoints can affect market sentiment and lead to repositioning as investors respond tactically. And this was evident in January when short-dated at-the-money implied volatility of E-mini S&P 500 futures options (ES), as represented on a rolling seven-day basis, rose from 9.75 to 11.31% (+1.57%) in response to U.S. action in Venezuela, and from 10.49% to 16.50% (+6.01%)  U.S.-EU trade tensions over Greenland (Exhibit 1).  

Some investors responded by hedging portfolios via a pronounced shift to defensive strategies while others sought opportunity navigating a new geopolitical environment. Indeed, investors can access a variety of expiries^[2] to match their specific needs to align with their specific risk windows to hedge uncertainty. The ES options complex provides around-the-clock liquidity across all trading hours (U.S., EMEA and APAC) for continuous risk management. This global participation ensures that different expiries remain liquid and valid for those that require to manage equity exposure as events unfold in real time across different time zones as well streamlining capital and operational efficiency.

With February underway, it is helpful to examine how investors positioned themselves in January using Equity Index options on futures, as represented by the short-dated January and February options, followed by March and June 2026 expiries.

The market behaviour evolved from a "protection" mindset across all maturities on January 2, to a regime by January 30 where immediate risks were ignored in favor of aggressive upside speculative targets. Short-term positioning was heavily defensive, characterized by significant hedging (put options) at lower levels. However, as the timeline extends into the March and June quarterly cycles, sentiment shifts significantly toward a bullish outlook, with traders positioning for upside targets above 8000.

1. Short-term outlook: Defensive and hedged (January – February expiries) 

The data from early to mid January highlights significant caution in the market.

• Heavy hedging: There were significant concentrations of put open interest (OI) at deep out-of-the-money (OTM) strikes, particularly 5700, 5850 and 6400, suggesting market participants were aggressively protecting against a sharp downside move.
• Immediate resistance: Call interest is relatively lower, forming a "call wall" around 7000 – 7100, acting as the immediate upside cap.

2. March 2026 expiry

As the focus shifts to the March 20 expiry, the liquidity deepens and the trading range widens.

• Broad "smile": The market anticipates higher volatility or a wider trading range.
• Put structures: Significant put clusters remain at 6400 and 6600, with deep tail-risk hedging visible at 5300.
• Upside expansion: There is substantial call OI building at 7300, 7400 and 7500. 

3. June 2026 expiry: Bullish expectations 

The June 2026 expiry data reveals the most optimistic sentiment as of January 30.

• Bullish bias: Put OI is minor/negligible in the provided range.
• Aggressive targets: Call OI is concentrated at 8000 and 8100. This indicates that institutional players or long-term speculators are anticipating a continued and robust upward trend for the first half of 2026.

As of January 30, the market positioning for the June maturity indicates that traders are preparing for potential volatility by establishing deep out-of-the-money (OTM) hedges at the 5000 level, this data collectively indicates an increased institutional demand for downside protection following the geopolitical developments in early January 2026. Meanwhile, bullish speculators are targeting a move towards 7600-8000 level.

Given the recent current events with only a few weeks into 2026, investors need to be able to change outlooks and adjust exposures real time during U.S. and non U.S. trading hours.

As 2026 progresses, we see that June ATM implied volatility is again below its long-term average and trading in-line with levels similar to that of 2025. Exhibit 4 illustrates the historical ATM implied volatility for the various June expiry S&P 500 options since 2010. It plots the average of the June expiries since 2010 and the respective ATM implied volatility for the June 2025 and 2026 expiries over the same period. The x axis represents the number of trading days since the beginning of the year so one can compare the current trajectory relative to its historic behavior. Trade policy and geopolitical uncertainty in the first half of 2025 caused options premiums and ATM implied volatility to rise. During the period between March – April 2025, when tariffs were announced on Liberation Day (April 2, 2025), June 25 ATM implied volatility peaked at around 34%. As market conditions stabilized, implied volatility then moved lower to around 15%, below its long-term average range of 16% – 19%.

CME Group Equity Index options on futures provide around-the-clock liquidity and market depth that can help market participants to efficiently manage equity market exposures. Trading nearly 24 hours allows market participants to take action as events unfold and prices move, tapping into deep liquidity across U.S., EMEA and APAC trading hours. 

Trading during non-U.S. hours has grown substantially, particularly in the futures options complex. Exhibits 5 and 6 depict the E-mini S&P 500 futures options average daily volume (ADV) as a whole and in non-U.S. hours (extended traded hours -ETH). The ADV for Equity Index futures options outside of U.S. trading hours reached +200,000 contracts as of December 2025, accounting for 16% of the total daily Equity options volume, as global institutions increasingly manage their risk around the clock.

^{Source: CME Group, annual data from 2020 to YTD 2025, as of December 2025}

This year is shaping up to be a period of potential heightened volatility, driven by a complex interplay of economic and geopolitical factors. Options on Equity Index futures offer a versatile toolkit to navigate this environment. Whether hedging risk, generating income or positioning for changes in volatility, these instruments provide investors with the flexibility to adapt their strategies.

^{[1] as measured using the S&P 500 Index
 [2] The surge in demand for shorter dated and 0DTE (zero days to expiration)}