Triple witching hour is the last hour of the
stock market 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 futures;
*
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 ti ...
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 d ...
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 futures 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 immedi ...
'' denoting the active time for
witch
Witchcraft traditionally means the use of magic or supernatural powers to harm others. A practitioner is a witch. In medieval and early modern Europe, where the term originated, accused witches were usually women who were believed to have u ...
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 communicative context and may not be well understood outside that context. The context is usually a partic ...
, 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
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Swing trading
Notes
Derivatives (finance)