Last Friday’s trading session was a “quad-witching” day for the market, which typically results in increased volatility and can lead to more extreme moves to either the upside or downside. A quad-witching day in the stock market refers to the third Friday of a month in which stock options, single-stock futures, index futures, and index futures options derivatives all expire on the same day.
CC Lagator, the founder of OptionsAI, joined Benzinga’s PreMarket Prep last Friday morning to discuss the quad-witching day and what it could mean for stocks. Lagator noted that the market leading up to this expiration felt different than previous ones, with the market trading sideways and experiencing extreme volatility on a day-to-day basis.
The SPDR S&P 500 Trust ETF (SPY) is up 2% in March, but the index has seen very volatile day-to-day and intraday moves. For example, on Thursday of last week, SPY was trading down more than 0.8% from its open price late in the afternoon, but rallied more than 0.5% in the last 25 minutes of the regular trading session, closing higher than its lows of the day.
Last Friday’s trading, which featured the quad-witching of different contracts and futures expiring, also saw increased volatility, with the S&P 500 dropping more than 0.5% in a two-hour span from around 10:30 am ET to 12:30 pm ET.
There are three remaining quad-witching days in the stock market scheduled for June 21, Sept. 20, and Dec. 20 this year. These days are typically marked by increased volatility and can create trading opportunities for investors.
Overall, quad-witching days can bring about heightened market activity and increased volatility, making it important for investors to stay informed and prepared for potential market moves. It will be interesting to see how the market reacts to future quad-witching days and how traders navigate the increased volatility that comes with them.
