The third Friday of each month is already a special time for the market because that is when equity and index options usually expire, so there’s extra volume/volatility. And then periodically we have a supercharged version:
Triple Witching — Triple witching is the simultaneous expiration of stock options, stock index futures and stock index options contracts all on the same day. It happens four times a year: on the third Friday of March, June, September, and December. Because three option classes expire all on the same day, it can cause increased trading volume and unusual price action in the underlying assets. –Investopedia
So institutional and retail folks who play the options market (not me) are scrambling to close out their positions while simultaneously setting up for the next month. Knowing this is useful, as it can partially explain the huge irrational dip yesterday in the tech market as some tried to “beat the rush” and possibly predicts an overall up market today as investors are forced to buy/sell their remaining options before they expire at 4pm. Which leads up to another exciting event:
Triple Witching Hour (Arbitrage) — In addition to the increased volume related to the offsetting of contracts during witching hours, the last hour of trading can also result in price inefficiencies and, with it, potential arbitrage opportunities. Due to heavy volume coming in over a short time frame, opportunistic traders seek imbalances in supply and demand. -Investopedia
Basically hold on to your hats today… and then watch things get really interesting between 3-4pm. These four securities below in particular have been pummeled lately and are primed for major upswings:
HEXO (HEXO)
Fluent (FLNT)
Perion (PERI)
Magnite (MGNI)
Happy Triple Witching Friday!
“When the going gets weird, the weird turn pro.” –Hunter Thompson