Quadruple witching day is today: How does it affect the market?
What is Quadruple Witching Day?
Quadruple witching is an event in financial markets when four different sets of futures and options expire on the same day.
Four times a year - on the third Friday of March, June, September and December - contracts for stock index futures, stock index options, single stock futures and stock options all expire on the same day. Many non-US contracts such as the DAX futures also expire on this day.
At certain times – namely the quadruple witching hours of quadruple witching Friday, many investors are closing out contracts they hold, which leads to heavy trading activity.
Market Impact of Quadruple Witching
The simultaneous expiration of stock-index futures, options on stock-index futures, single-stock options and index options can generate significant volatility and volume. On June 18, 2021, quadruple witching day saw above-average trading activity in the $S&P 500 Index(.SPX.US$ . Besides, the trading volume of the S&P 500 index reached 4.23 billion on March 18, 2022, which is the highest trading volume so far this year. According to Goldman Sachs, about $3.5 trillion of options derivatives are due to mature that day, the highest amount since 2019.
Coming up on June 17, 2022, Goldman Sachs put the amount at $3.4 trillion of option notional to expire. It's also a three-day weekend, Monday June 20 is a Federal holiday. The impending break will add to volatility.
Source: TradeStation, Goldman Sachs
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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SpyderCall : good reminder
LuckyPiggie SpyderCall: so the effect is positive or negative... ?
SpyderCall LuckyPiggie: it depends what options the investment banks and the whales have that are expiring today. It also depends what they choose to pick for their new options positions.
you could assume that the big banks are holding short options and the expire today. When short options expire or get exercised it makes the market go up generally. But id these whales just roll their position and get more puts with further out expirations then that is negative for the market
LuckyPiggie SpyderCall: thanks Spyder for the education
... im not familiar when options unfortunately . so i guess tonite will be an unknown since we cant tell what type of option are affected tonite. but i did see some YouTube mentioning repositioning of such option tonite.
SpyderCall LuckyPiggie: most definitely a lot of repositioning today. When the older options expire people collect the money and buy new options
Giovanni Ayala :
LuckyPiggie SpyderCall: somehow surprised to see it was green ... will see how it goes next week .
Skyzero : Its opportunity…