Quadruple witching day

Quadruple witching day (English: Quadruple witching day) refers to the third Friday of March, June, September and December in the U.S. stock market every year. It is the expiration and settlement date of all derivative financial products. These items include:

Stock Index Futures

Stock Index Options

individual stock options

individual stock futures

The expiration and settlement of these four commodities on the same day will cause a significant increase in trading volume and volatility in the market, especially during the last trading hour of the day, also known as the Quadruple witching hour (English: Quadruple witching hour), which is New York Time is 3pm to 4pm.

The Origin of the Four Witching Days

The concept of a quadruple witching day first appeared on November 8, 2002, when the U.S. market began trading individual stock futures, turning the original triple witching day (English: Triple witching day) that had only three commodities for expiry settlement into four.

Prior to this, Triple Witch Day refers to the third Friday of each month, which is the date when stock index futures, stock index options and individual stock options expire and settle at the same time.

The influence of the Four Witching Days

The impact of the Four Witching Days on the stock market mainly includes the following aspects:

Increased trading volume: Since many investors will close or roll over their contracts before expiry settlement, or exercise their option rights, this will increase the demand and supply of transactions in the market.

Increased volatility: Due to the increase in trading volume and investors' uncertainty about future price trends, stock prices will experience greater fluctuations and changes.

Increased arbitrage opportunities: As the price relationship between different commodities may deviate or be imbalanced, arbitrage opportunities will arise, allowing investors to take advantage of price differences to make profits.

Improved market efficiency: Since the Four Witching Days will cause the prices of many commodities in the market to become consistent or balanced, the efficiency and liquidity of the market will be improved.

Four Witching Day Strategies

The Four Witching Days may have different strategies and implications for different types of investors.

For long-term investors, the Four Witching Days may not have much of an impact on their portfolios, as they focus on long-term values and trends rather than short-term fluctuations and changes.

For short-term investors, the Four Witching Days may be an opportunity or a challenge, as they can take advantage of market volatility and arbitrage opportunities to gain profits, but they also bear higher risks and costs.

The Four Witching Day can be an important date for holders of derivatives, as they need to decide whether to close or roll over their contracts, or exercise or give up their option rights, before settlement at maturity.

Four Witching Day dates

The four witching days in 2023 are:

2023/3/17 (Friday)

2023/6/16 (Friday)

2023/9/15 (Friday)

2023/12/15 (Friday)

Summary of Four Witching Days

The Four Witching Day is a special date in the U.S. stock market, which is the maturity and settlement date for all derivative financial products. It will have a certain impact on the market, including changes in trading volume, volatility, arbitrage opportunities and market efficiency. Different types of investors need to develop their own strategies and actions based on their own goals and risk preferences.