US equity index futures begin trading at 6pm Eastern Time every Sunday, with most Sundays seeing little activity.
However, the current situation is different due to the ongoing Trump crash, prompting banks and brokerage desks to be fully staffed.
Foreign exchange indicates that further selling may be anticipated in the market.
Change In Sunday Trading
Typically, equity futures trade with minimal interest when they reopen on Sunday evenings. It’s the start of a fresh week, but one in which most traders remain on the sidelines, watching sentiment and flows firm up. This time, things were evidently not business as usual. We noticed full teams present on trading floors — including derivatives desks — hours ahead of the open, which is telling in itself. That sort of shift in posture generally reflects material concern over price action, not mere monitoring.
Macroeconomic catalysts aside, the sharp move lower that began earlier in the month continues to bleed across asset classes. The reaction in foreign exchange markets points more clearly towards a demand for dollar liquidity, alongside suspected repositioning by funds attempting to stay ahead of hedge pressure.
Those of us who track volatility-related instruments will be paying close attention to the shape of term structures across the S&P 500 and Nasdaq options, where recent shifts suggest short-dated protection is being hoarded far beyond normal risk-off cycles. Flattening across the curve suggests expectations are pricing in sharp movement in a very narrow window. We’ve also seen spot vol picks gaining bid even as indices tick lower, rather than the more traditional surge during periods of absolute panic — pointing to well-prepared positioning amongst institutional hands.
It is not that volatility has surged outright. Rather, the credibility behind downside hedging appears to be firm enough to result in a crowding effect, particularly around the deep out-of-the-money strikes. This has the knock-on effect of suppressing market-makers’ appetite to lean too actively on either side without absorbing higher premiums.
Impact On Market Makers
Meanwhile, rates desks are trading with conviction that upcoming domestic data releases might matter less than they usually do, at least in terms of their impact on risk assets in the near term. What’s grabbing attention is the pricing of event risk, seen clearly in the order flow coming through swaption and CDS markets tied to large-cap names.
We’ve seen pockets of relief in European equity futures, but they remain tentative and are not spilling over in a meaningful way to US-linked exposures. This division between geographies matters. It suggests that dealers are not expecting a broad-based recovery or synchronised risk appetite to materialise yet.
For short-term positioning, skew metrics add some colour. The premiums paid on put spreads have moved to levels consistent with traders who expect moderate follow-through, but not another large gap lower. At least not immediately. Equally, call spread overlays are thin, and not being lifted at size. That kind of behaviour usually reflects restraint, or hesitancy to chase rebound trades.
What we’re watching now is gamma — unmistakably long in parts of the curve, but overly stretched near key support levels. These levels, once broken with volume, often add fuel to directional flows; if options dealers are short gamma and spot declines, they’re forced to sell into weakness, which compounds downside pressure. This dynamic is not hypothetical — it’s being observed.
The feedback loop between hedgers and underlying index movement is tight right now. That should not be ignored. Rather than forecasting, action must come from modelling how volatility input changes dealer behaviour day by day. This means tracking inventory shifts in real time, and adjusting accordingly.
