The witching hour is the last hour of trading on the third Friday of each month when options and futures on stocks and stock indexes expire. This period is often characterized by heavy volumes as traders close out options and futures contracts before expiry.
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What is the Witching Hour in trading?
Sep 08, 2008 · The witching hour is the last hour of trading on the third Friday of each month when options and futures on stocks and stock indexes expire. This period is often characterized by heavy volumes as...
What is'Witching Hour'?
Feb 17, 2022 · In folklore, the witching hour is a supernatural time of day when evil things may be afoot. In derivatives trading, this has colloquially applied …
What are quadruple witching days in the stock market?
Witching hour, in a financial context, is the final hour of daily trading in the stock market between the bond market close at 3 p.m. EST and the stock market close at 4 p.m. Witching hour is characterized by greater volatility, which high-level professional traders and large institutions exploit for greater profits.
What are Witching days in the options market?
Jul 06, 2020 · In short, it's when several forces affecting the stock market, mostly having to do with stock options and index rebalances, all happen at once. And even though experts know exactly when witching days will occur, they can still give investors headaches.
Do Stocks Go Up On witching day?
Single Stock Options Stock options expire the third Friday of every month, so they're always active on quadruple-witching days.Feb 3, 2022
What does witching hour mean for stocks?
Triple witching hour is the last hour of the stock market trading session (3:00-4:00 P.M., New York City local Time) on the third Friday of every March, June, September, and December. Those days are the expiration of three kinds of securities: Stock market index futures; Stock market index options; Stock options.
Do stocks go up or down during witching hour?
Overall, total daily share volume is also typically 44% higher on “witching” days compared to a “normal” day. We also typically see a higher lit market share due to an increase in more volume trading on-exchange in the opening and closing crosses.Jun 10, 2021
What happens after quadruple witching day?
Following the week of quadruple witching, the market indices such as the S&P 500 tend to decline, perhaps due to exhausting the near-term demand for stocks. Despite the overall increase in trading volume, quadruple witching days do not necessarily translate into heavy volatility.
What time is the witching hour 2021?
3AM is commonly the accepted time, but some people consider the start of a new day, or midnight, to be the true Witching Hour.
How does triple witching affect the stock market?
Triple witching days, particularly the final hour of trading preceding the closing bell, known as the triple witching hour, can result in escalated trading activity and volatility as traders close, roll out, or offset their expiring positions.
Is triple witching bullish or bearish?
We have found that based on historical data, triple witching expiration weeks can bring unique trading opportunities. Gathering data over the last ten years, we were able to conclude that triple witching expiration week was very bullish and that the week after expiration was very bearish.
What usually happens on triple witching Friday?
Triple Witching Friday happens on the third Friday of March, June, September, and December, and is the simultaneous expiration (or rollover) of various futures and options contracts. Many U.S. stock index futures, stock index options, and stock options expire on these days.
How do you trade quadruple witching?
0:031:34An Overview of Quadruple Witching Day - YouTubeYouTubeStart of suggested clipEnd of suggested clipNext you have stock options on individual companies like apple tesla and microsoft normal expirationMoreNext you have stock options on individual companies like apple tesla and microsoft normal expiration for these occur on the third friday of each month which also falls on quad witching.
How long does quad witching last?
four daysQuadruple witching refers to four days during the calendar year when the contracts on four different kinds of financial assets expire. The days are the third Friday of March, June, September and December.Aug 11, 2021
What witching means?
the practice of witchcraft: the practice of witchcraft : sorcery. witching. adjective. Definition of witching (Entry 2 of 2) : of, relating to, or suitable for sorcery or supernatural occurrences the very witching time of night— William Shakespeare.
What months are quad witching?
Quadruple Witching Day occurs four times a year: the third Friday of March, June, September, December.Sep 17, 2021
Why do we have triple witching days?
Triple witching days generate trading activity and volatility because contracts that are allowed to expire may necessitate the purchase or sale of the underlying security. While some derivative contracts are opened with the intention of buying or selling the underlying security, traders seeking derivative exposure only must close, roll out, or offset their open positions prior to the close of trading on triple witching days.
What is double witching?
Similarly, double witching occurs when two classes of options on the same underlying expire on the same date, and quadruple witching when four do.
What is put option?
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 results in automatic transactions between the buyers and sellers of the contracts. As a result, triple witching dates lead to an increased amount of these transactions being completed.
What is futures contract?
A futures contract, which is an agreement to buy or sell an underlying security at a predetermined price on a specified day, mandates the agreed-upon transaction to take place after the expiration of the contract. For example, one futures contract on the Standard & Poor’s 500 Index (S&P 500) is valued at 250 times the value of the index. 2 If the index is priced at $2,000 at expiration, the underlying value of the contract is $500,000, which is the amount the contract owner is obligated to pay if the contract is allowed to expire.
Who is Akhilesh Ganti?
Akhilesh Ganti is a forex trading expert who has 20+ years of experience and is directly responsible for all trading, risk, and money management decisions made at ArctosFX LLC. He has earned a bachelor's degree in biochemistry and an MBA from M.S.U., and is also registered commodity trading advisor (CTA).
What is witching day?
A witching day on the market doesn’t have anything to do with boiling cauldrons, flying broomsticks, or black cats, but it is a day when strange and often unpredictable things happen. In short, it’s when several forces affecting the stock market, mostly having to do with stock options and index rebalances, all happen at once.
When is quadruple witching day?
Quadruple witching days occur four times every year, on the third Friday during the months of March, June, September, and December. So, on those days, stock index futures, stock index options, stock options contracts, and single stock futures all expire. The most recent quadruple witching day was June 19, and the next one will be on September 18.
Do witching days happen?
The important thing for the average investor to keep in mind is that witching days occur often, and they can create brief stretches of market bumpiness. But since they’re a normal part of market functions, and the turbulence they create is baked into market expectations, they’re generally not that big of a deal.
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The spooky-sounding quadruple witching gets a lot of fanfare in the news and was living up to its billing on Friday, amid the COVID-19 pandemic and rising anxieties on Wall Street.
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About the Author
Mark DeCambre is MarketWatch's markets editor. He is based in New York. Follow him on Twitter @mdecambre.
