The stock market was extremely volatile last week, but do you know that it was due to an event called “Quadruple Witching”? This is an event which occurs four times a year on the third Friday of March, June, September, and December.

Last Friday was the third Friday of September, it was a day on which four derivatives contracts expire simultaneously, namely:

  • Stock index futures
  • Stock index options
  • Stock options, and
  • Single stock futures

If you are not familiar with options and futures, you can read my two recent articles below.

Additional Readings:

The expiry of the contracts typically creates heavy trading volume because investors and traders need to offset existing futures and options contracts that are profitable. But interestingly, the market seems to have a high probability of directional shift after the Quadruple Witching event.

In the chart below, I have highlighted the price point and volume of the S&P 500 during the period of the past few Quadruple Witching days.

In my latest TikTok Video, I give more explanation on the “Quad Witching effect”. Click the video below to learn more.

About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
The views and opinions expressed in this article are those of the author. This does not reflect the official position of any agency, organization, employer or company. Refer to full disclaimers here.

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