Categories: Stocks

Triple Witching

Triple Witching refers to the third Friday of March, June, September and December, towards the end of each quarter, when three different types of derivative contracts are expiring. Due to this simultaneous activity, there is a huge increase in trading volumes and this can cause wide fluctuations in prices and huge volatility. Triple witching might not impact retail investors much because it is the large institutions or big trading entities who take action on their positions.

How does triple witching work?

The three types of derivative contracts expiring on triple witching day are:
a. Stock Options which include Call and Put options
b. Stock Index Futures which are futures contracts on a stock index
c. Index options which are option contracts on equity indexes

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