For the First Time in 24 Years, Triple Witching Has No Safety Net (We’re Playing Prison Rules Now)

By Stocks News   |   2 weeks ago   |   Stock Market News
For the First Time in 24 Years, Triple Witching Has No Safety Net (We’re Playing Prison Rules Now)

There’s no Fed speech (thank God). No shocking CPI print. No big Trump announcement (ok, we’ll have to wait on that). But beneath the surface, the market is pulsing with tension… because this isn’t any old regular trading day. It’s one of the four most chaotic days on the financial calendar. Welcome to Triple Witching… where a colossal $6.5 trillion worth of U.S. options are expiring. And if you don’t know what that means, you’re in luck. You’re about to find out why today might just smack the calm right out of this market.

Triple Witching

For the uninitiated, triple witching sounds like something out of Harry Potter, but in reality, it’s far more terrifying than a British child with a wand. It happens four times a year… on the third Friday of March, June, September, and December. And when it hits, it means three different types of financial contracts all expire at once: stock index futures, stock index options, and individual stock options.

In plain English, it’s the day the bill comes due on a massive chunk of Wall Street’s biggest bets. And when trillions in contracts unwind simultaneously, prices can go batsh*t crazy.

Triple Witching

Now, you might be wondering, “If this happens every quarter, why are you making such a big deal about this one?” Because today’s triple witching might be the biggest one ever. According to Rocky Fishman, a former equity derivatives strategist and the founder of Asym 500, this week’s expiration includes $6.5 trillion in notional value. Citigroup analysts peg it slightly lower at $5.8 trillion, but we’re still talking about a financial detonation the size of Canada’s GDP (aka America’s little brother).

So, what actually happens when all this stuff expires? In the weeks leading up to expiration, the market tends to get “pinned”... meaning prices stay unnaturally stuck near the strike prices of heavily traded options. That’s because market makers are hedging. They're buying and selling just enough to keep things balanced, like a tightrope walker in gale-force winds. The result is artificial calm.

Triple Witching

But when expiration hits (like it does today) those hedges vanish. The pins come out. And suddenly, the market isn’t being held in place by tens of billions in derivatives. It’s like cutting the strings off a marionette… and nobody knows where the limbs are going to fly.

And this time, it’s even weirder. Today’s triple witching is landing the day after a market holiday… something that hasn’t happened in at least 24 years. So in addition to making history, there’s even more added pressure… fewer trading hours to adjust positions, more uncertainty packed into a tighter window, and the possibility for some Monday morning market hangovers.

Triple Witching

Surprisingly, volatility has been eerily quiet since May. Despite tariffs, Middle East tensions, and the Fed board’s civil war on “to cut or not to cut, that is the question) markets have barely flinched. But that relaxed demeanor wasn’t natural. It was the result of structured hedging… dealers trapped in a position called positive gamma, where they’re basically forced to buy dips and sell rallies, smoothing out the ride for everyone else. But after today, those hedges may be gone. And without the dealers playing traffic cop, stocks could be free to swing much more wildly.

For reference, the last time things got this wild was March 20, 2020… peak COVID panic. Triple witching collided with global lockdowns, and the S&P 500 plunged 4.3% in a single day. That capped off a brutal week where the index bled nearly 15%, as investors panic-sold everything that wasn’t bolted to the floor… airlines, banks, even the so-called “safe” stuff.

Triple Witching

Then came June 18, 2021, which felt less like a market and more like a casino sponsored by Reddit. Meme stocks like AMC went full Tasmanian devil as retail traders clashed with institutional hedgers in a triple witching smackdown. Over 50 million options contracts traded hands that day… making it one of the busiest expirations in history. And if that wasn’t enough, the FTSE Russell rebalancing hit the same day, forcing funds to reposition tens of billions like they were trying to solve a Rubik’s Cube during an earthquake. The SPY’s trading range that day was nearly 7%. So yeah, you could’ve made or lost a small fortune during your lunch break.

Point is… this is so much more than some Dungeons and Dragons meetup for options geeks. If you’re trading today (or have the poor judgment to log into your brokerage account next week) just know the market’s playing by prison rules now. Stocks could whip around for no real reason at all… other than billions in contracts expiring and getting flung around like lawn chairs in a Florida hurricane. It’s a stress test for the entire market. It’s when we find out who’s been hedged… and who’s been skinny-dipping with leverage.

At the time of publishing this article, Stocks.News doesn’t hold positions in companies mentioned in the article. 

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