What does Quadruple Witching mean?
Quadruple witching refers to the simultaneous expiration of four kinds of futures or options contracts on a particular day. This usually results in increased volatility.
Futures Knowledge Explains Quadruple Witching
Quadruple witching happens once in every quarter. On the third Friday of every March, June, September and December, market index futures, market index options, stock options and stock futures expire. The expiration of these contracts can drive buying and selling. We generally see volatility in the markets on “quadruple witching Friday” as investors attempt to close their futures and options positions before the contracts expire. This increases trading volumes and brings considerable volatility in stock and derivative prices. A prudent investor can anticipate and plan his trading strategy to minimize impact of the quadruple witching.