What is Quadruple Witching?

Quadruple witching is a term in finance that refers to the simultaneous expiration of four types of derivative contracts on the same day: stock index futures, stock index options, single stock options, and single stock futures. This event occurs four times a year—on the third Friday of March, June, September, and December.

Why Does Quadruple Witching Matter?

On quadruple witching days, trading volume and volatility in the stock market often spike. This is because traders and institutions are closing, rolling over, or settling large numbers of contracts, which can lead to unpredictable price movements.

Key Dates

Quadruple witching happens on the third Friday of March, June, September, and December. These dates are important for traders who manage options and futures positions.

Impact on the Stock Market

The increased activity can cause short-term swings in stock prices, especially near the market close. While some investors may try to profit from the volatility, others may avoid trading on these days due to the unpredictable nature of the market.

Conclusion

Quadruple witching is a unique event that can create opportunities and risks for traders. Understanding when it occurs and its potential impact can help investors make more informed decisions.