An event that occurs when the contracts for stock index futures, stock index options and stock options all expire on the same day.The event happens on the third Friday in March, June, September and December when all four speculative derivatives i.e options, index options, single stock futures and index futures all expire on the same date.
he speculative investments are not for beginners and the reason these four Fridays carry a warning is the market can be especially chaotic on these freaky Fridays.
The markets are quite volatile in this final hour, as traders quickly offset their option/futures orders before the closing bell. If you are a long-term investor, triple witching will have a minimal impact on you.The reason for the chaos is traders in the expiring contracts scramble to close their positions and as they do, their actions may push the market up or down. Most of this action occurs in the final hour or so of the market and usually adds an extra measure of volatility of the action. Long-term investors should sit tight and let the madness pass. The market usually rights itself the following week.
The reason it is important to know these dates is you are better off not planning any buying or selling on these Fridays, especially late in the trading day.