Latest news with #triplewitching
Yahoo
6 hours ago
- Business
- Yahoo
Why the biggest-ever ‘triple witching' options expiration could deliver a jolt to Friday's trading
On Friday, option traders will face something unprecedented: A monthly options-expiration event coming one day after a holiday when major U.S. stock exchanges will have been closed for business. Contracts tied to more than $6 trillion in stocks, ETFs and indexes are due to expire during the latest 'triple witching' options-expiration event — potentially the largest sum on record, according to data from SpotGamma. 'I'm at my wit's end': My niece paid off her husband's credit card but fell behind on her taxes. How can I help her? Why the biggest-ever 'triple witching' options expiration could deliver a jolt to Friday's trading Israel-Iran clash delivers a fresh shock to investors. History suggests this is the move to make. 'I prepaid our mom's rent for a year': My sister is a millionaire and never helps our mother. How do I cut her out of her will? I'm 75 and have a reverse mortgage. Should I pay it off with my $200K savings — and live off Social Security instead? The quarterly undertaking is typically associated with higher trading volumes and greater volatility in the U.S. stock market. See: Is the stock market open on Juneteenth? Will the post office deliver mail? But the June event will take place one day after Thursday's Juneteenth markets holiday, and a monthly options-expiration event has never before followed a markets holiday, according to Dow Jones data going back to at least 2000 — although there have been numerous examples where monthly expirations occurred on the Friday before a long holiday weekend. 'On the one hand, it has the potential to be a low-volume day; a lot of people will probably take Friday off and make it a long weekend,' said Bret Kenwell, a U.S. investment analyst at eToro, told MarketWatch on Wednesday. 'But triple-witching days are usually one of the most high-volume days of the entire quarter,' he added. 'So it does have the potential for maybe some wackier moves, and maybe some bumpiness.' Adding to the uncertainty, the latest bout of volatility inspired by the Israel-Iran conflict has pushed the Cboe Volatility Index VIX back above 20, a level roughly equivalent to its long-term average. Higher volatility tends to push the premiums that traders pay for option contracts higher. The VIX is based on activity in options tied to the S&P 500. Brent Kochuba, founder of SpotGamma, said he had initially expected volatility to subside heading into Thursday's holiday. SpotGamma is a provider of data and analytics about the options market. 'But that may not be in the cards due to the geopolitical backdrop,' Kochuba told MarketWatch via email. U.S stocks were trading higher on Wednesday afternoon as Federal Reserve Chairman Jerome Powell held his regular press conference following the conclusion of the central bank's two-day policy meeting. The S&P 500 SPX was up by 20 points, or 0.3%, at 6,002 in recent trade, according to FactSet data. The Dow Jones Industrial Average DJIA was up by 122 points, or 0.3%, at 42,339. The Nasdaq Composite COMP was up by 113 points, or 0.3%, at 19,660. Mike DeStefano contributed reporting Why Tom Lee says the odds favor a stock-market rally after the Fed decision I'm 51, earn $129K and have $165K in my 401(k). Can I afford to retire when my husband, 59, draws Social Security at 62? 20 companies in the S&P 500 whose investors have gained the greatest rewards from stock buybacks Israel-Iran conflict poses three challenges for stocks that could slam market by up to 20%, warns RBC 'It might be another Apple or Microsoft': My wife invested $100K in one stock and it exploded 1,500%. Do we sell? Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
14 hours ago
- Business
- Yahoo
Wall Street Braces for a $6.5 Trillion Shake-Up -- Will Stocks Break Free Next Week?
A wave of nearly $6.5 trillion in US equity options is about to roll off this Fridaypossibly setting the stage for a new round of stock market turbulence. Tesla (NASDAQ:TSLA) and other popular names sit at the heart of this quarterly triple witching event, where index options, single-stock options, and ETF contracts all expire at once. While the expiry itself may not trigger a sharp move on the day, the aftermath could look very different. Rocky Fishman, founder of Asym 500, called this one among the largest ever and flagged the potential for markets to finally break free from the tight range theyve traded in since May. Whats held stocks in check? According to Fishman, a wave of defensive trades earlier this year effectively pinned the S&P 500 around current levels. During Aprils tariff-fueled volatility, many investors bought downside protection while selling upside calls near 6,000 betting the index wouldnt get that high. As those trades expire, that ceiling could lift. Its all tied to how dealers hedge. When markets are in a positive gamma regime, as they are now, dealers tend to smooth volatilitybuying when stocks drop and selling into rallies. But once those positions expire, that cushion may disappear. Some strategists are watching closely. Matthew Thompson at Little Harbor Advisors sees these expiry windows as chances to make volatility plays in his ETF strategies. Citigroup analysts Vishal Vivek and Stuart Kaiser note that triple-witching days usually arent much more volatile than regular monthly expiriesbut this one stands out due to sheer size. Citi estimates $5.8 trillion in contracts are expiring, while Fishman includes additional index futures options to arrive at $6.5 trillion. Either way, the hedging flows that follow could be a key driver of what comes next. This article first appeared on GuruFocus.
Yahoo
14 hours ago
- Business
- Yahoo
Wall Street Braces for a $6.5 Trillion Shake-Up -- Will Stocks Break Free Next Week?
A wave of nearly $6.5 trillion in US equity options is about to roll off this Fridaypossibly setting the stage for a new round of stock market turbulence. Tesla (NASDAQ:TSLA) and other popular names sit at the heart of this quarterly triple witching event, where index options, single-stock options, and ETF contracts all expire at once. While the expiry itself may not trigger a sharp move on the day, the aftermath could look very different. Rocky Fishman, founder of Asym 500, called this one among the largest ever and flagged the potential for markets to finally break free from the tight range theyve traded in since May. Whats held stocks in check? According to Fishman, a wave of defensive trades earlier this year effectively pinned the S&P 500 around current levels. During Aprils tariff-fueled volatility, many investors bought downside protection while selling upside calls near 6,000 betting the index wouldnt get that high. As those trades expire, that ceiling could lift. Its all tied to how dealers hedge. When markets are in a positive gamma regime, as they are now, dealers tend to smooth volatilitybuying when stocks drop and selling into rallies. But once those positions expire, that cushion may disappear. Some strategists are watching closely. Matthew Thompson at Little Harbor Advisors sees these expiry windows as chances to make volatility plays in his ETF strategies. Citigroup analysts Vishal Vivek and Stuart Kaiser note that triple-witching days usually arent much more volatile than regular monthly expiriesbut this one stands out due to sheer size. Citi estimates $5.8 trillion in contracts are expiring, while Fishman includes additional index futures options to arrive at $6.5 trillion. Either way, the hedging flows that follow could be a key driver of what comes next. This article first appeared on GuruFocus. Sign in to access your portfolio
Yahoo
15 hours ago
- Business
- Yahoo
Same-day trading & Friday's triple witching: What to know
This Friday will be a "triple witching": the simultaneous expiration of stock options, futures, and index options. Yahoo Finance Markets and Data Editor Jared Blikre, who also hosts Yahoo Finance's Stocks in Translation podcast, explains what to expect from Friday's triple witching and goes over the increasing popularity of using daily and weekly options for same-day trades. Twice a week, Stocks In Translation cuts through the market mayhem, noisy numbers and hyperbole to give you the information you need to make the right trade for your portfolio. You can find more episodes here, or watch on your favorite streaming service. To watch more expert insights and analysis on the latest market action, check out more Catalysts here. Five trillion dollars is set to vanish Friday on triple witching options expiration, but the real action lately has been coming from options that die every afternoon. I'm Jared Blikre, host of Stocks and Translation. First up, Friday is triple witching, the expiration where quarterly index futures roll off as well as monthly index options and monthly equity options, that stock options as well. Index contracts, they settle at the open of the day, while individual stock options, they wrap up at the close, and this sparks a huge rebalancing act throughout the day. But over the last decade, daily and weekly options have opened up as well, which traders have been increasingly using for same day trades. And that's what zero days to expiration options are, trades that are opened and closed on the very same day. And they're taking over the monthlies in volume. And unlike monthly options, the index options, they settle at the end of the day, not the open. So this makes them useful for playing these event driven markets. Now check this out. Back in 2016, at the very left-hand side beginning of this chart, only 5% of options were same day trades. That's as weekly options had just been green lighted. But fast forward to today, nearly half of all S&P option volume is zero dated. That is a massive shift making every afternoon a potential volatility event. And here is the retail versus institutional split. Retail traders, that's up top and white, they often step back when markets are volatile. In this chart, times of high volatility, they're shaded gray. But then look how institutions step up during this period. So-called smart money gravitates more to zero dated options in times of stress, while retail, retail tends to back off. And there are clear advantages to these same day options. One is rapid payoff. You get results quickly, which isn't always good, but it can work for you. Also, there's good volume and liquidity on these contracts most of the day. This means that you can get in, easy entry and also easy exit. And same day means that there's no overnight gap. So by definition, maybe you can sleep a little bit better. But there's also a flip side. That rapid payoff means rapid time decay. So premiums, they evaporate fast if you're buying options. Also, that high liquidity, it dries up near the close. So watch out for wide spreads that make it hard to trade as the trading day is about to end. And finally, and most importantly, it's really easy to over lever. A little leverage goes a long way. So final final thought here, it's commonly believed that triple witching means spiky volatility, but that's mostly true for individual stocks. Indices like the S&P 500 actually tend to calm down as the big names get pinned to their big strike levels. So don't expect too much volatility this Friday from triple witching itself, but we could still get moves from plays made on the geopolitical chessboard. And tune into Stocks and Translation for more jargon busting deep dives. New episodes on Tuesdays and Thursdays on Yahoo Finance's website or wherever you find your podcast. Sign in to access your portfolio
Yahoo
18 hours ago
- Business
- Yahoo
A $6.5 Trillion ‘Triple Witching' Heralds Return to Volatility
(Bloomberg) -- Investors are bracing for $6.5 trillion of notional US options expiring on Friday, in a move that could free stocks to swing more wildly than the subdued changes seen in recent weeks. Security Concerns Hit Some of the World's 'Most Livable Cities' JFK AirTrain Cuts Fares 50% This Summer to Lure Riders Off Roads Taser-Maker Axon Triggers a NIMBY Backlash in its Hometown How E-Scooters Conquered (Most of) Europe One Architect's Quest to Save Mumbai's Heritage From Disappearing Every quarter, a cluster of different exchange-traded derivatives contracts all terminate on the same day, leading to what is sometimes dubbed a 'triple witching' event by market watchers. The event isn't expected to add additional volatility on Friday itself, but could open a path to more sudden stock market moves next week. Daily gyrations in US stocks have been relatively restrained since early May, a situation helped by the pinning effect of a swath of bearish options trades placed earlier in the year — when the chances of the S&P 500 making a recovery to near-record highs seemed remote, according to Rocky Fishman, the founder of research firm Asym 500 LLC. 'Pinning' refers to the tendency of a stock price to close near the strike of heavily-traded options as the expiration date nears. During the height of tariff-driven volatility in early April, many pessimistic investors bought insurance against a further drop in stocks, funding those positions by capping upside a little beyond the S&P 500's current level of 5,981. 'People might have seen a 6,000 level as something that's really hard to get to as we were dealing with a lot of the tariff drama over the last few months, and therefore sold calls in the 6,000 range as a way of funding protection at various points,' said Fishman, who called Friday's expiry 'one of the largest ever' in a recent note. The way market makers and broker-dealers have to hedge their own books can have major implications and echo back into equity markets. Fishman says dealer hedging could be a contributing factor to the fairly placid state of equity markets since early May, despite turmoil in the Middle East and continued tariff talks. To Fishman, the market is in a state known as positive gamma, which means players can be incentivized to sell into rallies and buy dips. It was different during early April's tariff turmoil, when many intermediaries found themselves having to dump stock into falling markets, and then buy it back as markets rose, exacerbating swings, according to Matthew Thompson, co-portfolio manager at Little Harbor Advisors. Thompson pays attention to expiry events like the triple-witching because it can help the equity ETFs he manages alongside his brother Michael take tactical positions in volatility markets. 'We're mostly interested in the dealers and how they have to hedge all of that exposure,' Thompson said in an interview on Wednesday. The quarterly triple-witching days are not usually much more volatile than monthly options expiry events, according to a study by Vishal Vivek and Stuart Kaiser, strategists at Citigroup Inc. Still, Friday's event is 'notable,' the pair wrote recently to clients. There is no standard way to calculate the amount of listed-derivatives due to expire on any one day - it depends which type of asset class and contract one includes in the figure. Citi estimates that Friday will see $5.8 trillion of notional open interest across equities expire, including $4.2 trillion of index options, $708 billion of bets on US ETFs and $819 billion of single stock options. Fishman's larger figure of roughly $6.5 trillion also includes the notional value of options on equity index futures expiring on Friday. Ken Griffin on Trump, Harvard and Why Novice Investors Won't Beat the Pros Is Mark Cuban the Loudmouth Billionaire that Democrats Need for 2028? The US Has More Copper Than China But No Way to Refine All of It How a Tiny Middleman Could Access Two-Factor Login Codes From Tech Giants Can 'MAMUWT' Be to Musk What 'TACO' Is to Trump? ©2025 Bloomberg L.P.
