What Is Quadruple Witching?

9 sept 2021

What Is Quadruple Witching?

Quadruple witching refers to a date on which stock index futures, stock index options, stock options, and single stock futures expire simultaneously. This happens in the US market but since the US market affects the markets worldwide, hence it becomes an important event for all other markets too.

Highlights:

• Quadruple witching refers to a date on which derivatives of stock index futures, stock index options, stock options, and single stock futures expire simultaneously.
• It occurs once every quarter, on the third Friday of March, June, September, and December.
• Quadruple witching days witness heavy trading volume, in part, due to the offsetting of existing futures and options contracts that are profitable.

Triple/Quadruple Witching Dates 2021:

• March 19, 2021
• June 18, 2021
• September 17, 2021
• December 17, 2021

Triple/Quadruple Witching Dates 2020:

• March 20, 2020
• June 19, 2020
• September 18, 2020
•December 18, 2020

If you go and analyze S&P 500 index, in the 15 days before and after quadruple witching day, there are 59 events from 2006 to 2021. The S&P 500 typically rallies from the 6th day before to the day before quad witch day. It is evident that the market typically declines on quadruple witching day itself.

A similar pattern can be seen in the case of Nifty. In the majority of the cases, the Nifty starts falling from a few days just before quadruple witching day. You can see the chart above to see the effect of Quadruple Witching on NIfty since the last year. So, it is advised to stay cautious in the next week. Be careful with your positions.

Good luck, stay safe!

Disclaimer: This is NOT investment advice. This chart is meant for learning purposes only. Invest your capital at your own risk.