Triple witching is the simultaneous expiration of stock options, stock index futures, and stock index options contracts, all on the same trading day. This happens four times a year, on the third Friday of March, June, September, and December. The expected expiration date for the three might increase trading volume and cause unusual price changes 🍎in the underlying assets.

Understanding Triple Witching

Triple-witching days generate more trading activity and volatility since contracts allowed to expire cause buying or selling of the 澳洲幸运5官方开奖结果体彩网:underlying security. While some derivative contracts are opened with the intention of trading the underlying security, traders seeking derivative exposure on𝓰ly must close, roll out, or offset their open positions before the close of trading on triple-witching days.

Triple-witching days, particularly the final hour of trading preceding the closing bell (4 p.m. Eastern time), known as the triple-witching hour, can spike trading activity and 澳洲幸运5官方开奖结果体彩网:volatility as traders close, roll✱ out, or offset their expiring poဣsitions.

Single-stock futures, last traded in the United States in 2020, were typically grouped with stock options, index options, and index futures, giving rise to the term “quadruple witching.” But ♏they never drew nearly as much capital or trading interest as the other types of equity derivatives, most notably stock options.

Offsetting Futures Positions

A 澳洲幸运5官方开奖结果体彩网:futures contract, an agreement to buy or sell an underlying security at a set price on a specified day, mandates that the transaction take place after the contract expires.

For example, one E-mini S&P 500 futures contract is valued at 50 times the value of the index. If the S&P 500 is at 4,000 at expiration, the value of the contract is $200,000, the amount 🃏that the contract’s owner must pay if the contract expires.

To avoid this, the contract owner closes the contract by selling it before the expiration. After closing the expiring contract, exposure to the S&P 500 index can be continued by♊ buying a new contract in a forward month. This is known as “rolling out” a contract. Much of the action surrounding futures and options on triple-witching days is focused on offsetting, closing, or rolling out positions.

On the expiration date, contract owners can decide not to take delivery and instead close their contracts by booking an 澳洲幸运5官方开奖结果体彩网:offsetting trade at the prevailing price, settling the gain or l🍷oss from the purchase and sale prices.

Traders may also extend the contract by offsetting the existing trade and simultaneously booking a new option or futures contract to be settled in the future, which is called “rolling the contract forward.”

Expiring Options

Options that are in the money are similar for those holding expiring contracts. For example, the seller of a covered 澳洲幸运5官方开奖结果体彩网:call option can have the underlying shares called away if🌄 the share price closes above the stri🦹ke price of the expiring option.

In this situation, the option seller can close the position before expiration to contin♐ue holding the shares or let the option expire and have the shares called away.

Call options expire in the money—that is, they are profitable when the underlying security price is higher than the 澳洲幸运5官方开奖结果体彩网:strike price in the contract. Put options are in the money when the stock or index is priced below the strike price. In both situations, the expiration of in-the-money options causes automatic transactions between the buyers and sellers of the contracts. As a result, triple-witching☂ dates are when all three types of contracts—stock index futures, stock in🌸dex options, and stock options—all expire on the same day, causing an increase in trading.

Triple Witching and Arbitrage

Though much of the trading in closing, opening, and offsetting futures and options contracts during triple-witching days is related to squaring positions, the surge of activity can also produce price inefficiencies, which can draw in short-term 澳洲幸运5官方开奖结果体彩网:arbitrageurs—those who seek to profit from them.

These ꧃opportunities might be catalysts for heavy volume going into the close on triple-witchin🅷g days, as traders look to profit on small price imbalances with large round-trip trades completed in seconds.

An Example of Triple Witching

Friday, March 15, 2019, was the first triple-witching day of 2019. Trading volume leading up to this third Friday of the month had increased market activity. Trading volume on March 15, 2019, on U.S. market exchanges was 10.8 billion shares, compared with an average of 7.5 billion average the previous 20 trading days.

For the week leading into the triple-witching Friday, the S&P 500, Nasdaq, and the Dow Jones Industrial Average (DJIA) were up 2.9%, 3.8%, and 1.6%, respectively. However, it seems much of the gains happened before the triple-witching Friday because the S&P 500 and DJIA increased only 0.50% and 0.54%, respectively, that day.

Triple-Witching Dates

Tꦯriple witching happens four times a year (or once a quarter) on the third Fridays of March, June,ꩵ September, and December.

澳洲幸运5官方开奖结果体彩网: 2025

• March 21
• June 20
• Sept. 19
• Dec. 19

澳洲幸运5官方开奖结果体彩网: 2026

• March 20
• June 19
• Sept. 18
• Dec. 18

澳洲幸运5官方开奖结果体彩网: 2027

• March 19
• June 18
• Sept. 17
• Dec. 17

Triple vs. Quadruple Witching

The terms🌞 “triple witching” and “quadruple witching” are often used to describe occasions on the third🉐 Friday of March, June, September, and December. For about 20 years, they had one difference, but since 2020, they have referred to the same event.

Triple witching occurs when three types of financial co🌠ntracts expire simultaneously:

• Stock options are contracts that give the holder the right to buy or sell a stock at a specified price.
• 澳洲幸运5官方开奖结果体彩网:Stock index options: Options on stock indices like the S&P 500 or Dow Jones Industrial Average
• 澳洲幸运5官方开奖结果体彩网:Stock index futures: Futures contracts based on stock indices that obligate the buyer to purchase or the seller to sell the index at a predetermined price on a given date

The fourth type of contract involved in quadruple witching, single-stock futures, hasn’t traded in the U.S. since 2020. Any references to quadruple witching are about the three types of contracts above expiring simultaneously.

The Bottom Line

Triple witching refers to the third Friday of March, June, September, and December, when three kinds of securities—stock market index futures, stock market index options, and stock options—expire on the same day. Derivatives traders pay close ⭕attention on these dates, given the potential for increased volume and volatility in the markets.