Home / Dictionary / Q / Quadruple Witching Hour
"In business and finance, the term "quadruple witching hour" refers to a specific time period on the third Friday of March, June, September, and December when four different types of financial derivatives contracts expire simultaneously."
Quadruple Witching Hour:
In business and finance, the term "quadruple witching hour" refers to a specific time period on the third Friday of March, June, September, and December when four different types of financial derivatives contracts expire simultaneously. This phenomenon is also known as "quadruple witching day" or simply "quadruple witching."
During the quadruple witching hour, four sets of contracts expire at the same time: stock index futures, stock index options, single stock futures, and stock options. These contracts are all tied to the performance of underlying assets, such as stock indices or individual stocks.
The quadruple witching hour can result in increased trading activity and volatility in the financial markets as traders and investors adjust their positions or roll over their contracts. It is a time when market participants often rebalance their portfolios or close out their positions, which can lead to significant price movements and increased trading volume.
The expiration of these contracts during the quadruple witching hour can have implications for various market participants, including institutional investors, traders, and market makers. It is a period of heightened market activity and can present both opportunities and risks for investors.
It's important to note that while the quadruple witching hour is a notable event in the financial markets, its impact on overall market trends and performance may vary. Other factors, such as economic news, geopolitical events, and investor sentiment, can also influence market movements during this time.
It is advisable for investors and traders to exercise caution and closely monitor market conditions during the quadruple witching hour. Understanding the potential impact of this event and having a well-defined trading strategy can help navigate the increased volatility and take advantage of any opportunities that may arise.
In summary, the quadruple witching hour refers to a specific time on the third Friday of March, June, September, and December when four different types of financial derivatives contracts expire simultaneously.
It is a period of increased trading activity and volatility in the financial markets, potentially presenting opportunities and risks for market participants.