According to Financial Association on December 20 (Editor: Liu Rui), this Friday Eastern Time, the US stock market will once again welcome another "Triple Witching Day," with over $6 trillion in Stocks, ETFs, and Index-related Options set to expire, and it is expected to become the largest "Triple Witching Day" in history.

After the Fed's "hawkish rate cut" this week, the US stock market just experienced a significant sell-off. Additionally, on Friday night, the USA will release key PCE data. The arrival of "Triple Witching Day" during this critical period is sure to cause considerable market fluctuations.

The US stock market will welcome "Triple Witching Day."

Each quarter, Options contracts linked to individual Stocks, ETFs, and indices such as the S&P 500 will expire together with those Futures contracts linked to the major stock indices. Experts in the derivatives market call this "Triple Witching Day" because the expiration of large numbers of derivatives contracts usually coincides with higher trading volumes and volatility.

Data provided by Asym 500 indicates that $6.6 trillion in Stocks, ETFs, and Index-related Options are set to expire, while others believe the expiration scale may be even higher, reaching $7.7 trillion.

Similar to past "Triple Witching Days," the US stock market is expected to see the most active wave of trading at the market open on Friday, as most of the Index options linked to the S&P 500 will either be exercised or expire.

According to Rocky Fishman of Asym 500, based on the nominal value of $6.6 trillion, the quarterly expiration this Friday will be the largest in history.

U.S. stocks are currently in a high-risk period.

The 'Triple Witching' event has always received close attention from traders. However, this time the risk of 'Triple Witching' is particularly high, as the Federal Reserve's 'hawkish rate cut' this week has just triggered a round of sell-offs in U.S. stocks.

Due to concerns that the Federal Reserve may soon end the rate cut cycle, the Dow Jones Industrial Average fell more than 1,100 points on Wednesday and barely rose on Thursday, ending a ten-day losing streak. At the same time, this concern also triggered the largest single-day increase in the Cboe Volatility Index on Wednesday.

Moreover, to make matters worse, on Friday morning Eastern Time (Friday 21:30 Beijing Time), the USA will also release the latest Personal Consumption Expenditures (PCE) data, and if this Index exceeds investor expectations, it could exacerbate market volatility.

'Friday's Personal Consumption Expenditures report makes things even more interesting. If the data is too hot, it may increase the recent selling pressure, while if the data is below expectations, it may calm Wall Street's recent worries about reflation,' said eToro U.S. investment analyst Bret Kenwell.

Brent Kochuba, founder of SpotGamma, stated that before the sell-off in U.S. stocks on Wednesday, the expiration date on Friday was extremely imbalanced: the number of open contracts for Call Options far exceeded that of Put Options.

However, following the sell-off triggered by the Federal Reserve, Kochuba mentioned that the situation has changed in the past 24 hours, although the number of open contracts for Call Options still exceeds that of Put Options.

Kochuba stated that as these Put Options expire or roll over, they may help stabilize the market, as the hedging funds from traders could help suppress volatility rather than exacerbate it.

However, Kochuba stated that he is more concerned that Wednesday's sell-off may just be a "preliminary shock" before a more painful downturn that may begin in early 2025.