Understanding Triple Witching
October 28, 2022
If you’re a trader or investor, you may have heard of the term Triple Witching. What does it mean? Contrary to how it sounds, it doesn’t refer to Halloween in June or a scary movie. It’s a popular term among option traders where it’s the expiration on the same day of stock options, stock index options and stock index futures.
It happens 4 times each year -on the third Friday of March, June, September and December. The next one is on Friday, December 16, 2022.
Triple witching days typically generate more trading activity and volatility because contracts that are allowed to expire may require the buying or selling of the underlying security. However, Triple Witching can also be a calm event, with lower volatility and a statistical bias to the upside. You’ll have to carefully monitor the market to determine what the final effect will be and how it affects your trading positions.
On Triple Witching Days, the final hour of trading just before the closing bell is known as the Triple Witching Hour. This hour may result in heightened trading activity and volatility as traders close, roll out, or offset their expiring positions.
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This information provided for general informational purposes only and should not be considered recommendations or advice by eOption.
Options trading involves risk and is not suitable for all investors. Options trading privileges are subject to eOption review and approval. Please review the Characteristics and Risks of Standardized Options brochure and the Supplement before you begin trading options.
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