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Quadruple witching is a term used in financial markets to describe the simultaneous expiration of four different types of financial instruments: stock options, index options, single-stock futures, and stock index futures. It takes place on the third Friday in March, June, September, and December.
The name "witching" stems from the assumption that the simultaneous expiration of these products might create volatility and unpredictability in the markets, perhaps causing investors to endure "witching hour" stress. Prior to the quadruple witching, traders and investors frequently modify their positions to prevent possible market disruptions.
Due to market participants' adjustments to their positions prior to expiration, quadruple witching can also generate a considerable amount of trading volume. As traders respond to fresh information or news that impacts the underlying instruments, this higher volume may also result in more volatility.
