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Black Friday: Quadruple (Quad) Witching: Definition and How It Impacts Stocks…

What Is Quadruple Witching?

The term quadruple witching refers to the simultaneous expiration four times a year of stock options, index futures, and index futures options derivatives contracts. The fourth type of contract involved in quadruple witching, single-stock futures, hasn’t traded in the U.S. since 2020 and was never a major contributor to equity trading volumes. What is now effectively “triple witching” occurs on the third Friday of March, June, September, and December. Equity trading volume tends to rise on these days and is typically heaviest during the last hour of trading as traders adjust their portfolios.

Key Takeaways

Investopedia / Mira Norian

Understanding Quadruple Witching

The four derivatives contracts accounting for the ‘quadruple’ in quadruple witching are stock index futures, stock index options, stock options, and single stock futures. While single stock futures now only trade outside the U.S., the quarterly expiration of index futures and index options, coinciding with the monthly stock options expiration, produces a flurry of trading.

Despite the evocative name, what happens during what is now triple witching is not a supernatural phenomenon, nor a mystery. Market makers who’ve sold expiring stock and index options contracts close out the matched hedge positions, boosting trading volume. Meanwhile, the rolling…

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