The Fed jitter over, another disturbing event ahead
The Fed jitter over, another disturbing event ahead. This is the eventful U.S. market.
- A $3.5 trillion ‘triple witching’ event here
- A $3.5 trillion ‘triple witching’ event here
The market will brace a quarterly event known as triple witching, roughly $3.5 trillion of single-stock and index-level options are set to expire, according to Goldman Sachs Group Inc. At the same time, more near-the-money options are maturing than at any time since 2019 -- suggesting a bevy of investors will actively trade around those positions.
And once again, this triple witching coincides with a rebalancing of benchmark indexes including the S&P 500 -- a combination that tends to spark single-day volumes that rank among the highest of the year. According to an estimate from Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, the rebalance in the index alone could spur $33 billion of stock trades, reported by Bloomberg.
And once again, this triple witching coincides with a rebalancing of benchmark indexes including the S&P 500 -- a combination that tends to spark single-day volumes that rank among the highest of the year. According to an estimate from Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, the rebalance in the index alone could spur $33 billion of stock trades, reported by Bloomberg.
- What are triple and quadruple witching days?
Triple/quadruple witching refers to four days when financial asset contracts expire in a
calendar year.
The days are the third Friday of March, June, September, and December. This year, they fall on March 18, June 17, September 16, and December 16 respectively. The witching hour is the last hour of the trading session on the quadruple witching Friday when options and futures on indexes and equities expire.
calendar year.
The days are the third Friday of March, June, September, and December. This year, they fall on March 18, June 17, September 16, and December 16 respectively. The witching hour is the last hour of the trading session on the quadruple witching Friday when options and futures on indexes and equities expire.
What is the difference between triple and quadruple witching days?
- Triple witching: stock options, stock index futures, and stock index options contracts expire on the day.
- Quadruple witching: stock options, single stock futures, stock index futures, and stock index options contracts expire on the day.
- Why do they matter?
A lot of contracts expire on the same day, the witching day usually sees a heavier volume of trading, which will cause market chaos.
Put it simply, on the negative side, history suggests that returns haven’t improved significantly. Volatility may bring gains or huge losses.
The positive impact on the market that day is that arbitrage trading brings arbitrage profit opportunities.
- How to hedge your portfolio?
The positive impact on the market that day is that arbitrage trading brings arbitrage profit opportunities.
- How to hedge your portfolio?
Increased volatility will certainly affect ordinary investors. It's always necessary to master some investment rules that help us meet challenges in the long run.
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For more investment knowledge and trends, moomoo Learn is always here.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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