Triple witching hour
Encyclopedia
Triple witching hour is the last hour of the stock market
trading session (3:00-4:00 P.M., New York Time) on the third Friday of every March, June, September, and December. Those days are the expiration of three kinds of securities:
The simultaneous expirations generally increases the trading volume of options, futures and the underlying stocks, and occasionally increases volatility
of prices of related securities.
On those same days in March, June, September, and December, Single-stock futures also expire, so that the final hour on those days is sometimes referred to as the quadruple witching hour.
of the three financing instruments, and is based on the witching hour
denoting the active time for witches.
It is used often and is considered industry jargon
.
Stock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...
trading session (3:00-4:00 P.M., New York Time) on the third Friday of every March, June, September, and December. Those days are the expiration of three kinds of securities:
- Stock market index futureStock market index futureIn finance, a stock market index future is a cash-settled futures contract on the value of a particular stock market index.-Market:The turnover for the global market in exchange-traded equity index futures is notionally valued, for 2008, by the Bank for International Settlements at USD 130...
s; - Stock market index optionStock market index optionStock market index option is a type of option, which is a financial derivative. Index options may be tied to the price of either broad-based indexes like the S&P 500 Index or the Russell 3000 Index or to narrow-based indexes, which is an index that is limited to a particular industry like the...
s; - Stock options.
The simultaneous expirations generally increases the trading volume of options, futures and the underlying stocks, and occasionally increases volatility
Volatility (finance)
In finance, volatility is a measure for variation of price of a financial instrument over time. Historic volatility is derived from time series of past market prices...
of prices of related securities.
On those same days in March, June, September, and December, Single-stock futures also expire, so that the final hour on those days 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 datesExpiration (options)
For an option contract, expiration is the date on which the contract expires. The option holder must elect to exercise the option or allow it to expire worthless.Typically, option contracts expire according to a pre-determined calendar. For instance, for U.S...
of the three financing instruments, and is based on the witching hour
Witching hour
The witching hour is a the time of day when supernatural creatures such as witches, demons and ghosts are thought to appear and be at their most powerful, and black magic at its most effective...
denoting the active time for witches.
It is used often and is considered industry jargon
Jargon
Jargon is terminology which is especially defined in relationship to a specific activity, profession, group, or event. The philosophe Condillac observed in 1782 that "Every science requires a special language because every science has its own ideas." As a rationalist member of the Enlightenment he...
.