Quad Witching

Quad Witching is when various Futures Contracts and Options Contracts all expire on the same day. When contracts are expiring, often holders of said contracts chose to exercise those contracts and sell the shares they receive. That selling pressure, holding all else equal, puts pressure on prices and can cause a market-wide bearish period.

Sometimes the expectation of this bearish period can cause the market to be bearish or sideways in the days leading up to the event. Other times, the bearish effects might become “baked in” and cause a bullish market on the Quad Witching date. And other times, the market price action that day is dictated by something else entirely. While nothing is guaranteed, traders anticipate seeing extra volatility leading up to, and on the day of Quad Witching.