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Today is a stock market “quadruple witching day.” What does that mean?

Financial markets climb and plunge for all sorts of reasons, some of which are rational and some that seem like they are based in hocus pocus. The third Friday of June is typically a quadruple witching day, which sounds like magic but actually describes a logical yet hectic event.

The four things the “quadruple” refers to are the expiration of contracts for stock index futures, stock index options, stock options, and single stock futures. All four types of financial agreement expire on the same day, the third Fridays of March, June, September and December.

Without going into too much detail about each of these complex stock agreements,  they are all based on the idea of a futures contract. A buyer agrees to purchase (or has the option to) a certain amount of stock at a set price on a certain date in the future. Quadruple witching day is that date.

There is often a difference between the agreed-upon price of a futures stock and its actual worth on the expiration day. That difference creates all kinds of opportunities for brokers and investors to make some money or lose it, but their window of opportunity is small: the expiration doesn’t happen till late on the day, close to the closing bell. Perhaps another way to describe the situation is a recipe for volatility.

If all the talk of money depresses you, here’s a fun semi-related fact: Friday is named for the Norse Goddesses Frigg or Freya, and Freya drives a chariot pulled by cats.

7 Comments

  1. wolf tamer and coal miner -  February 9, 2014 - 9:32 pm

    Cool! I want a chariot pulled by cats… ;) Although the article doesn’t tell us what the “witching” part means.

    Reply
  2. Glory -  January 24, 2011 - 4:42 pm

    That’s really intriguing. How magic plays a part in the lives of everyone, yet how many understand anything of it!

    Freya Frigg on Friday…quadruple witching day! too cool stuff.

    Not for children, to say the least…but its great to me to understand what the heck I am trying to understand when such strange phrases come up in conversation or online.

    Thanks!

    Reply
  3. WHATZATMEAN? | BLOGCHI@mayopia.com -  August 18, 2010 - 10:05 am

    [...] already addressed “quadruple witching day.” — as we said before we’re trying to fill some gap. — PLEASE excuse our redundancy [...]

    Reply
  4. QUADRUPLE WITCHING DAY | BLOGCHI@mayopia.com -  August 14, 2010 - 7:49 pm

    [...] “QUADRUPLE WITCHING DAY” is one more thing we don’t understand — though anything about WALL STREET or any stock exchange — it all seems like Hocus Pocus with NADA supply and demand. — It’s money making money though one thing we know for sure — it has nothing to do with “Triskaidekaphobia” with 13 Ghosts less not more — though someone gets the money no matter how we spin it — Even if the market crashes selling short will still begin it. — On Friday flies the Eagle and the fodder in the Game — are the farmers working Farmville and Fools like us voting for whom the Bell Tolls discounting us to take the “Blame”. –Rupert L.T.Rhyme [...]

    Reply
  5. Moultrie D, -  August 14, 2010 - 12:32 pm

    I’m wondering who herded the cats to hook them to the chariot.
    Or who gives a frigg

    Reply
  6. GrayKat -  August 14, 2010 - 10:55 am

    It is not completely unrelated – with witching days fall on Fridays, Freya’s day. And I can think of nothing with more potential for volatility than a herd of cats hooked to a chariot!

    Reply
  7. C -  June 18, 2010 - 2:56 pm

    Ha, the fun fact looks like it’s for little kids, as it’s almost completely unrelated.

    Reply

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