In the U.S. financial markets, the witching hours occur between 3:00pm ET and 4:00pm ET when multiple classes of options or futures expire on the same day. Double witching (when two classes of options or futures expire) occurs on the third Friday of every month, except at the end of each financial quarter in March, June, September and December. In those months, quadruple witching occurs when contracts on stock index futures, stock index options, stock options and single-stock futures all expire. If you are wondering about triple witching, that became synonymous with quadruple witching in 2002 when single-stock futures began trading.Because futures and options traders must close out of their positions prior to the expiration dates, trading volume and volatility tend to increase leading up to and during the witching hours. And as with any forward looking volatility event, investors can decide whether to trade on the event or avoid it altogether.
The only scary thing about witching hours is not knowing when they are coming. That is why we have added double and quadruple witching hours to Enchilada, our online application that integrates more forward-looking corporate event types than any other service available.
So for those without the safety blanket of an Enchilada subscription . . . here are the near term witching hours that you should add to your diary:
April 15 - Double Witching
May 20 - Double Witching
June 17 - Quadruple Witching