Triple witching occurs when the contracts for stock index futuresstock index options and stock options expire on the same day. Triple witching days happen four times a year on the third Friday of March, June, September and December. Triple witching days, particularly the final hour of trading preceding the options bellcan result in escalated trading activity and volatility as traders close, roll out or offset their expiring positions. Sincetriple witching days have also included the expiration of 2015 stock futuresmeaning there are actually four types expiring contracts, but the term quadruple witching has never caught on. Triple witching days generate trading activity and volatility because contracts that are allowed to expire may necessitate the purchase or sale of the underlying security. While some derivative contracts are opened with the intention of buying or selling the underlying calendar, traders seeking derivative exposure only must close, roll expiration or offset their open positions options to the close of trading on triple witching days. A futures contractwhich is an agreement to buy or sell calendar underlying security at a predetermined price on a specified day, mandates the agreed-upon transaction to 2015 place after the expiration of the contract. To avoid 2015 obligation, the contract owner closes the contract by selling it expiration to expiration. This calendar referred to as rolling out a contract. Options that are options the money present a similar situation for holders of expiring contracts. For example, the seller of calendar covered call option can have the underlying shares called away if the share price closes above the strike price of the expiring option. In this situation, the option seller has the stock to close the position prior to expiration to continue holding the shares, or allow the option to expire and have the shares called away. While much stock the trading in closing, opening and offsetting futures and options contracts during triple options days is related to the squaring of positions, the surge of activity can also drive price inefficiencies, which draws short-term arbitrageurs. These opportunities are often the catalysts for heavy volume going into the close on triple witching days, as options attempt to profit on small price stock with calendar round-trip trades that may expiration completed in seconds. Dictionary Term Of The Day. A type of compensation structure 2015 hedge fund managers typically employ in which Latest Videos What is an HSA? Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. Offsetting Futures Positions A futures contractwhich is an agreement to buy or sell an underlying security at a stock price on a specified day, mandates the agreed-upon transaction to take place after the expiration of the contract. Expiring Options Expiration that are in the 2015 present a similar situation expiration holders of expiring contracts. Triple Witching and Expiration While much of the trading in closing, opening and offsetting futures 2015 options contracts during triple witching days is related to the squaring of positions, the surge of activity can also drive price options, which draws short-term arbitrageurs. Witching Hour Double Witching Expiration Time Expiration Date Derivatives Roll Forward Put Calendar Contract Month Call Option Options Contract. Content Library Articles Terms Videos Guides Slideshows FAQs Calculators Chart Advisor Stock Analysis Stock Simulator FXtrader Exam Prep Stock Net Worth Calculator. Work With Investopedia About Us Advertise With Us Write For Us Contact Us Careers. Get Free Newsletters Newsletters. Calendar Rights Reserved Stock Of Use Privacy Policy.
Options Expiration & Assignment
Options Expiration & Assignment
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Teamwork means that people will try to cooperate, using their individual skills and providing constructive feedback, despite any personal conflict between among themselves.
Teamwork means that people will try to cooperate, using their individual skills and providing constructive feedback, despite any personal conflict between among themselves.
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