Triple witching hour is the last hour of the
stock market
A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on businesses; these may include ''securities'' listed on a public stock exchange, as ...
trading session (3:00-4:00 P.M.,
New York City local Time) on the third Friday of every March, June, September, and December. Those days are the expiration of three kinds of securities:
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Stock market index future
In finance, a stock market index future is a cash-settled futures contract on the value of a particular stock market index. The turnover for the global market in exchange-traded equity index futures is notionally valued, for 2008, by the Bank for ...
s;
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Stock market index option Stock market index option is a type of option, a financial derivative, that is based on stock indices like the S&P 500 or the Dow Jones Industrial Average. They give an investor the right to buy or sell the underlying stock index for a defined tim ...
s;
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Stock option
In finance, an option is a contract which conveys to its owner, the ''holder'', the right, but not the obligation, to buy or sell a specific quantity of an underlying asset or instrument at a specified strike price on or before a specified dat ...
s.
The simultaneous expirations generally increases the trading volume of options, futures, and their underlying stocks, occasionally increasing the
volatility of prices of related securities.
On those same days
single-stock future In finance, a single-stock future (SSF) is a type of futures contract between two parties to exchange a specified number of stocks in a company for a price agreed today (the futures price or the strike price) with delivery occurring at a specified ...
s also expire, so that the final hour is sometimes referred to as the quadruple witching hour.
Concept and usage
The term "triple witching" refers to the extra volatility resulting from the
expiration dates of the three financing instruments, and is based on the ''
witching hour
In folklore, the witching hour or devil's hour is a time of night that is associated with supernatural events, whereby witches, demons and ghosts are thought to appear and be at their most powerful. Definitions vary, and include the hour imm ...
'' denoting the active time for
witch
Witchcraft traditionally means the use of Magic (supernatural), magic or supernatural powers to harm others. A practitioner is a witch. In Middle Ages, medieval and early modern Europe, where the term originated, accused witches were usually ...
es.
It is used often and is considered industry
jargon
Jargon is the specialized terminology associated with a particular field or area of activity. Jargon is normally employed in a particular Context (language use), communicative context and may not be well understood outside that context. The conte ...
, along with the synonym, ''Freaky Friday''.
[{{cite web , url=https://hitandruncandlesticks.com/what-is-triple-witching/ , title=What is triple witching? , last1=Saddler , first1=Rick , date=June 25, 2014 , website=Hit & Run Candlesticks , publisher= , access-date=July 1, 2016 , quote=This daylong event, which is sometimes referred to as “Freaky Friday,” is an important day for short-term investors because the markets tend to be turbulent and unpredictable, shifting erratically as traders attempt to offset their orders before the closing bell rings.]
See also
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Program trading
Program trading is a type of trading in securities, usually consisting of baskets of fifteen stocks or more that are executed by a computer program simultaneously based on predetermined conditions. Program trading is often used by hedge funds an ...
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Swing trading
Swing trading is a speculative trading strategy in financial markets where a tradable asset is held for one or more days in an effort to profit from price changes or 'swings'. A swing trading position is typically held longer than a day trading po ...
Notes
Derivatives (finance)