Beware the Triple Witch
Friday is triple witching, the simultaneous expiration of options on stocks, futures on stock indexes and options on stock indexes. This event only occurs four times a year and it often causes volatility in markets.
An estimate $4 trillion notional options are set to expire on Friday, according to Goldman Sachs. When these options disappear from the books of investors and dealers they often need to square their positions, something often could leads to wild intraday swings in markets.
Triple witching sees some of the highest volume of any trading day during the year. The increased liquidity makes it the perfect opportunity for investors who want to put on or take off large positions before the end of the year. After Friday, volume tend to dry up into the holiday season.
Additionally, major indexes such as the S&P 500 will adjust their weightings to account for shifts in market capitalization at the close on Friday. This often leads to major swings in individual stocks as well as the overall market in the last half hour of trading as traders get ahead of these changes.
The views and opinions of Mooney Navigator are those of the author who is not an associated person of Moomoo Financial Inc. The view and opinions of the author do not reflect the views of Moomoo Financial Inc. or any of its affiliates. The views and opinions of the author are provided for informational purposes only, do not constitute a recommendation of an investment strategy or to buy, sell, or hold any investment in any form, and are not research reports and should not be used to serve as the basis for any investment decision. All investments involve risk including the loss of principal and past performance does not guarantee future results.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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The Brown Knight : Meaningless
73128960 : That’s last Friday bro
razo2 :
razo2 : this one 4 days to respawn. Jesus wins
71731194 : so in short can you make it easier for dummies like me to understand do I buy hold or sell?
zdqhj 71731194 : What kind of tickets does this shareholder usually trade?