Quadruple Witching is a Magical Day for Markets

Quadruple Witching is a Magical Day for Markets

2022-11-23 • Updated

Besides US Retail Sales data, Australian Unemployment Rate and New Zealand GDP this week will bring us Quadruple Witching – one of the four most important days of a year for futures and options!

What is witching day about?

Quadruple witching refers to four days during the calendar year when the contracts on four different kinds of financial assets expire. The expiration date is the point at which a position automatically closes. In other words, traders will have to decide what they want to do with their open position before the expiry date. The days are the third Friday of March, June, September, and December. The assets are:

  • Stock index options
  • Stock market index futures
  • Individual stock company options
  • Single-stock futures (not commonly traded, was called triple-witch before these were introduced)

Options contracts also expire monthly. Futures contracts expire quarterly. Because traders and institutions run out of time at the close of trading, there is a lot of portfolio re-balancing, contract rollovers, and more. The last hour of the trading session (22:00 to 23:00 GMT+3) is when the volatility really increases, and assets swing dramatically.

Is it tradeable?

Because all four types of contracts expire on the same day, the quadruple witching day is usually accompanied by bigger trading volumes and volatility. On June 18, 2021, a quadruple witching day, a near-record volume of single-stock equity options was set to expire at the end of the day in the amount of $818 billion. As a result, a near-record of single stock open interest of about $3 trillion stood on June 18, 2021. Open interest refers to how many contracts are open during any given point during the day. It is an important metric for traders to watch since a large amount of open interest can move the value of the underlying stock.

But you need to know, that these Freaky Friday days (the second name for the day is even stranger than the first) in general are not bullish or bearish. You cannot just buy or short sell and make guaranteed money. What is guaranteed, however, is that there will be a big surge of volatility. There is on average 40% more volume on this day than the average.

quad witch.jpg

Source: https://www.bloomberg.com/news/articles/2020-09-18/stock-traders-brace-for-quadruple-witching-amid-options-anxiety?sref=qgDWnyMx 

Also, note that the last hour of the session is usually bearish because long positions are prevailing against short ones, and closing these trades might cause a plunge in prices.

What to trade

US 500 and US 100 will be more volatile this Friday. Because of trading volumes, US 500 index will be able to reach distant resistance at 4370 or plunge through the 4450 level (if the Index doesn’t do this earlier this week).

US500Daily.png

The same goes for oil, gas, and gold, so keep an eye on XAU/USD, XNG/USD, and XBR/USD. Brent oil is surging for several days already, so we may see strong pullbacks to the $71 level.

XBRUSDDaily.png

In stock market, consider trading such companies as Tesla or Alcoa because they either have huge options volume or are commodity-based. Moreover, Alcoa is on the rise because the aluminum price is skyrocketing. Both rise to $52 and plunge to $46 levels are possible.

ALCOADaily.png

LOG IN

Similar

Stocks To Watch For March
Stocks To Watch For March

During his program on CNBC on February 28, Jim Cramer expressed frustration with the impact of earnings reports on market behavior, noting how they often prompt rash decisions by average investors. He criticized the short-term focus and lack of attention to nuance in news coverage of earnings. Cramer cited examples of Home Depot and Lowe's, highlighting how investors reacted hastily to headline news without considering the broader context provided in earnings calls.

Jingle Bulls: How Will The Santa Rally Impact Amazon And Apple?
Jingle Bulls: How Will The Santa Rally Impact Amazon And Apple?

As the year winds down and the festive spirit takes hold, the stock market often presents a curious yet anticipated phenomenon known as the Santa Rally. Within this whirlwind of festive trading, let’s look at how two titans of the tech world, Amazon and Apple, might fare during this unique season.

Latest news

USD: Powell Speaks on Cutting Interest Rates
USD: Powell Speaks on Cutting Interest Rates

Jerome H. Powell, the Federal Reserve chair, stated that the central bank can afford to be patient in deciding when to cut interest rates, citing easing inflation and stable economic growth. Powell emphasized the Fed's independence from political influences, particularly relevant as the election season nears. The Fed had raised interest rates to 5.3 ...

WTT: Currency Pairs To Trade In April
WTT: Currency Pairs To Trade In April

Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.

Deposit with your local payment systems

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

 1
 93
 355
 213
 1684
 376
 244
 1264
 672
 1268
 54
 374
 297
 61
 43
 994
 1242
 973
 880
 1246
 375
 32
 501
 229
 1441
 975
 591
 387
 267
 55
 246
 673
 359
 226
 257
 855
 237
 1
 238
 1345
 236
 235
 56
 86
 61
 61
 57
 269
 242
 243
 682
 506
 225
 385
 53
 357
 420
 45
 253
 1767
 1809
 593
 20
 503
 240
 291
 372
 251
 500
 298
 679
 358
 33
 594
 689
 241
 220
 995
 49
 233
 350
 30
 299
 1473
 590
 1671
 502
 224
 245
 592
 509
 39
 504
 852
 36
 354
 91
 62
 98
 964
 353
 44
 972
 39
 1876
 81
 962
 7
 254
 686
 850
 82
 965
 996
 856
 371
 961
 266
 231
 218
 423
 370
 352
 853
 389
 261
 265
 60
 960
 223
 356
 692
 596
 222
 230
 262
 52
 691
 373
 377
 976
 382
 1664
 212
 258
 95
 264
 674
 977
 31
 599
 687
 64
 505
 227
 234
 683
 672
 1670
 47
 968
 92
 680
 970
 507
 675
 595
 51
 63
 64
 48
 351
 1787
 974
 262
 40
 7
 250
 590
 290
 1869
 1758
 590
 508
 1784
 685
 378
 239
 966
 221
 381
 248
 232
 65
 421
 386
 677
 252
 27
 500
 34
 94
 249
 597
 268
 46
 41
 963
 886
 992
 255
 66
 670
 228
 690
 676
 1868
 216
 90
 993
 1649
 688
 256
 380
 971
 44
 1
 1
 598
 998
 678
 58
 84
 1284
 1
 681
 2
 967
 260
 263
00:00
00:00
00:00
01:00
02:00
03:00
04:00
05:00
06:00
07:00
08:00
09:00
10:00
11:00
12:00
13:00
14:00
15:00
16:00
17:00
18:00
19:00
20:00
21:00
22:00
23:00
23:00
23:00
00:00
01:00
02:00
03:00
04:00
05:00
06:00
07:00
08:00
09:00
10:00
11:00
12:00
13:00
14:00
15:00
16:00
17:00
18:00
19:00
20:00
21:00
22:00
23:00

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera