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Triple Witching Definition

Dictionary of Financial Terms

Also called triple expiration, triple-witching refers to the quarterly expiration of index futures, index future options and certain stock options on the third Friday of March, June, September and December. This can cause some pretty big swings in the stock market.

For instance, if a lot of people think that the next futures contract looks expensive, they may decide not to "roll" their contracts and instead buy the underlying stocks. That will add some buying pressure to the market and, if there's not much else moving the market that day, drive stocks higher. Nowadays, many futures and options players unwind positions ahead of triple-witching Friday, so the effect has been dampened in recent years.

Options and derivatives analysts, by the way, hate it when you say "triple witching." That's because back in the day, before the market tanked in October 1987, the expirations all happened in the morning. Now options expiration has moved to the afternoon, so these folks argue that calling it triple-witching is inaccurate.

Whatever.

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