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Options traders and leveraged ETFs are powering the market comeback, but the energy sector remains absent from the rally, raising concerns for investors.
The S&P 500 has logged its seventh straight week in the green, buoyed by a surge in call‑option buying and leveraged‑ETF inflows, even as the energy sector stays conspicuously out of the rally [2].
Over the past seven weeks, bullish options activity—especially short‑dated, zero‑day‑until‑expiration contracts—has forced market makers to buy shares to stay “delta neutral,” creating a “gamma squeeze” that amplified price gains. The Squeeze Metrics Gamma Index, which tracks dealers’ exposure to sold call options, hit its highest level since 2021, a level analysts describe as “historically high” [2]. When gamma spikes, dealers must purchase the underlying stocks, feeding the rally further.
The rally’s engine is not just earnings. While the first‑quarter earnings season delivered a 27.7% blended growth rate for S&P 500 members—the fastest since Q4 2021—most of that lift came from semiconductor and energy names, leaving other sectors thinly supported [2]. Heavy buying of leveraged ETFs and options‑based products has reshaped market dynamics, magnifying both upside and downside risk, according to Nomura’s cross‑asset strategist Charlie McElligott [2].
Meanwhile, the energy sector, despite soaring commodity prices, has not participated in the upside. The article notes that surging energy prices (CL00, BRN00) initially pushed the S&P 500 toward correction territory in March, but the subsequent rebound was driven by other sectors, leaving energy stocks lagging behind the broader market gains [2]. This divergence raises a warning flag for investors who might assume the rally is universal.
The concentration of gains in a handful of hot tech and energy stocks, combined with extreme options positioning, could set the stage for a sharp pullback. Former options market maker Daniel Roos warns that the current leg higher may “give way to a painful pullback” as profit‑taking and positioning shifts occur [2]. Moreover, the Cboe Implied Three‑Month Correlation Index fell to its lowest since January 2025, suggesting investors are crowding into individual stock bets rather than broader macro trades, a pattern that historically precedes volatility spikes [2].
If the gamma‑driven boost fades, the market could see amplified losses, especially for leveraged‑ETF holders, underscoring why the energy sector’s silence matters: it highlights the rally’s fragility and the risk that a sector‑wide correction could trigger a broader downturn. The real question now is whether the options‑driven momentum can sustain itself or if a rapid unwind will expose the market’s underlying weaknesses.
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AI-assisted synthesis by the TrendWatcher Editorial Desk · sourced from 2 outlets · Jun 16, 2026 · How we report
A tentative deal between the United States and Iran to extend a cease‑fire and reopen the Strait of Hormuz lifted hopes for energy‑market stability, prompting gains across U.S. and Asian equity indexes.
Brent crude fell about 5% to just above $83 a barrel, a decline that helped ease inflation pressures but remains above pre‑conflict levels.
Technology, especially AI‑related stocks, saw strong gains, with SpaceX up 19.6% and chip makers Micron, AMD, and Nvidia each posting double‑digit increases.
While the deal is expected to allow the strait to reopen soon, analysts say it could take months for oil flows to normalize because about 500 ships are still waiting to pass through.
Investor sentiment turned more positive, with risk appetite increasing as the perceived geopolitical risk of the Iran‑U.S. conflict receded.