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Finance Dictionary and Glossary of Investment Terms
triple witching hour
Definition 1.
The final hour of the stock market trading session on the third Friday of March, June, September, and December, when option contracts and futures contracts expire on market indexes used by program traders. The simultaneous expirations often set off heavy trading of options, futures and the underlying stocks, which can cause large fluctuations in the value of their underlying stocks.
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Definition 2.
The last hour of trading on the third Friday of March, June, September and December, when investors rush to unwind their positions in index options and futures, all of which are expiring on the same day. Triple witching hour has produced some major price swings as investors buy and sell both the derivatives and the underlying securities.
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Definition 3.
The four times a year that the S&P futures contract expires at the same time as the S&P 100 index option contract and option contracts on individual stocks. It is the last trading hour on the third Friday of March, June, September, and December, when stock options, futures on stock indexes, and options on these futures expire concurrently. Massive trades in index futures, options, and underlying stock by hedge strategists and arbitrageurs cause abnormal activity (noise) and volatility.
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