Triple and Quadruple Witching Days: A Key Guide to Understanding Market Volatility

[The Witches of the Financial Market, Triple and Quadruple Witching Days]

When participating in the financial market, you may come across an interesting word: 'witch.' Especially on specific days called Triple Witching Day or Quadruple Witching Day, market volatility tends to be higher than usual, demanding caution from investors. In this post, we will delve into the identity of these witches and what happens on those days.

Triple and Quadruple Witching Days, Causes of Financial Market Volatility

1. Triple Witching Day: The Day Three Derivatives Expire Simultaneously

Triple Witching Day refers to the day when the expiration dates of three derivatives—stock index futures, stock index options, and single-stock options—coincide. These three products are closely related, so on their expiration date, there is a flurry of activity to close out existing positions or roll them into new ones. This process generates large-scale buy or sell orders, which temporarily amplifies stock market volatility.

Triple Witching Day occurs four times a year: on the third Friday of March, June, September, and December. As these dates approach, investors must decide how to handle their derivative positions, so market participants' attention becomes highly focused.

---

2. Quadruple Witching Day: When the Magic Becomes Even More Powerful

Quadruple Witching Day is when the expiration dates of the three derivatives mentioned above, plus 'single-stock futures,' all coincide. Because the expirations of four major derivatives happen on the same day, it can be accompanied by a much larger volume of trading and volatility than on a Triple Witching Day.

The addition of single-stock futures expiration further amplifies the impact on the market. Since the prices of each derivative influence one another, a concentration of expiration dates can lead to complex interactions and unpredictable volatility.

Quadruple Witching Day also occurs four times a year, on the same third Friday of March, June, September, and December as Triple Witching Day. Thus, it is considered one of the days with the highest volatility throughout the year.

---

3. Investment Strategy: Exploit Volatility or Avoid It?

Triple or Quadruple Witching Days can bring significant short-term market volatility, but their impact on long-term trends may be limited. Therefore, investors should carefully observe the volatility on these days and respond cautiously according to their investment strategy.

• Short-term Investors: Can seek short-term profits by leveraging volatility, but must accept high risk.
• Long-term Investors: It is important not to be swayed by temporary volatility and to stick to your investment principles. A steep decline could even be an opportunity for a low-cost purchase.

---

4. Conclusion: How to Wisely Deal with Market Volatility

In conclusion, Triple and Quadruple Witching Days are factors that increase financial market volatility due to the concentration of derivative expiration dates. Investors should understand these characteristics and establish a strategy that fits their investment goals and risk tolerance to flexibly respond to market changes.

Key Summary:
Triple and Quadruple Witching Days are days when derivative expiration dates coincide, which can increase market volatility. Investors should establish a strategy to either utilize short-term volatility or respond wisely from a long-term perspective, depending on their investment style.

The content of this blog is for reference in making investment decisions only, and all investment decisions must be made under the individual's own judgment and responsibility. Under no circumstances can the information in this blog be used as legal proof for investment outcomes.