This Friday the listed derivative markets will experience the event known as "Triple Witching." So how much do you know about this event and how it could impact your investments?Here's a look at derivative expirations and how they affect you, as an investor, and how you can try to capitalize on related trading opportunities.
Second, the SPX index options, which were traded until the end of the expiration day and were valued as of the close (referred to as "PM" options), were modified so that the options ceased trading the end of the day prior to expiration and the settlement value was calculated at the open (referred to as "AM" options). Lastly, derivative contracts, which were mostly available on a quarterly cycle (March, June, September, December expiration), are now readily available on a monthly cycle. The effect of these changes was to dramatically reduce the impact of the Triple Witching trading and expand derivative trading over more expiration dates. However, in today's world, the quarterly Triple Witching day tends to have more volume associated with its derivative contracts and can lead to more volatile markets.