Quadruple witching day a quarterly phenomenon
Today is quadruple witching day! I know, it seems odd so far away from Halloween, but it actually happens four times a year, and it refers to a certain stock market event. There are not four magic sorcerers or stock traders wearing costumes with pointy hats.
Quadruple witching day simply refers to a day every quarter when several options contracts expire at the same time.
What effect does quadruple witching have?
On quadruple witching day, “stocks are more likely to push higher during the expirations.” This means that all three major markets are likely to finish higher today. However, the positive difference will have to be pretty big for any market to finish without a loss.
That reminds me, I should check on how my stock in that company that does payday loans in Lomita with no faxing.
Quadruple witching hour
The magic on quadruple witching day actually happens all in the last hour of trading, which is called the quadruple witching hour. It falls the third Friday of March, June, September and December.
The quadruple witching hour is from 3 p.m. to 4 p.m. Eastern Standard Time, or, as they like to call it, New York Stock Exchange time.
The ‘quad’ in quadruple witching
Quadruple witching happens four times per year, but that isn’t where it got its name. Quadruple witching refers to four types of securities. Those four are:
- Stock index futures
- Stock market index options
- Stock options
- Single stock futures
History of jargon
Quadruple witching was originally called triple witching, before the introduction of single stock futures. Because it was originally called triple witching, many believe it is a reference to the Three Witches featured in Shakespeare’s classic MacBeth.
The phrase was based on these literary characters in order to indicate the additional volatility that leads up to the securities expirations. The term, now “quadruple witching” is generally only used by stock market participants, and thus it is considered industry jargon.
MacBeth and money
This isn’t the first time MacBeth has been associated with money. I know of several high schools that did productions of MacBeth to raise money for the drama club or even just for the school overall. MacBeth has been made into several movie incarnations, although none of them made a significant amount at the U.S. box office.
An independent film called “Scotland PA” was loosely based on MacBeth as well. The film was released in 2001 and made $384,098 at the box office – not bad for an indie film. The movie took several liberties with Shakespeare’s original plot. For instance, rather than battling over a kingdom, the characters fight for ownership of a fast-food restaurant. The film is set in the ’70s, and the central character, named “Mac,” reveals his idea for the drive-thru window to his boss, only to later be passed over for a promotion in favor of the owner’s son.
So, if you’re not glued to watching the stock market today in anticipation of quadruple witching hour, maybe you can check it out.
