Citadel Securities’ Rubner Lifts Bearish Call, Sees March Bounce

Source: Citadel Securities Source: Citadel Securities

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(Bloomberg) — As US stock investors endure bouts of volatility in the wake of the US war on Iran, Citadel Securities’ Scott Rubner said his fundamental analysis of the market signals now is a time to turn bullish on equities.

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Rubner, who studies positioning and the flow of funds, said washed-out sentiment, supportive seasonality and resilient retail flows have set the stage for a rebound after weeks of choppy trading. 

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The call is an about-face for Rubner, who correctly predicted February would be a weak month for equities. It comes as global markets grapple with the impact from a spike in energy prices and the potential for a protracted war in the Middle East.

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“We take off our tactical bearish call and see scope for a bounce into mid-month, with volatility normalization acting as a catalyst,” Rubner, the firm’s head of equity and equity derivatives strategy, wrote in a note to clients Wednesday. 

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The reversal follows feedback from his global clients and mounting evidence that sentiment has already deteriorated sharply. 

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“The bear camp has become too popular,” Rubner wrote, arguing that positioning now leaves room for a move higher.

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The S&P 500 Index rose at the open Wednesday after two days of steep early losses that were largely reversed by the end of those sessions. The index is down less than 1% this week, though realized volatility has spiked.

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Stocks are coming off the worst month since March 2025, and the drawdown left positioning defensive and hedging activity elevated, setting up what Rubner sees as a more favorable risk-reward backdrop should tensions ease.

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Retail Flows Stay Robust

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Relentless purchasing from retail traders made January the largest net buying month on record on Citadel Securities’ platform, the strategist said. February, though softer, still ranked fifth in the firm’s history and was the strongest month since April 2021.

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“Retail remains the strongest hand in the entire market,” Rubner wrote.

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Famously, that group of investors is loaded with ardent dip buyers who have been driving the intraday rebounds in recent selloffs. Year-to-date, the average net notional dollar value traded has run 2.5 times larger on down days than up days, Rubner said. That ratio surged to 4.3 times in February alone, underscoring the persistence of dip-buying even as volatility climbed.

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Options activity has stayed equally elevated. Average daily retail options volume this year is running about 14% above 2025 levels and nearly 47% above the 2020–2025 average, he said. That suggests durable participation rather than episodic bursts of speculation.

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Reset in volatility and FOMO-led rally

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About $5 trillion notional value of options, or 35% of US options exposure, is set to roll off by March 20, the largest March expiration on record. With much of that positioning coming from call overwriting, option dealers have been selling into rallies to reset hedges.