Key insights
- A large $5.7 trillion triple-witching options expiry on Friday is anticipated to increase market volatility. Traders must close, roll, or rebalance positions, which could lead to abrupt price swings as derivative exposure vanishes. This event poses a short-term bearish risk for US equities due to potential for increased market turbulence.
Wall Street equities traders are bracing for an unusually large tally of options expiring on Friday, which risks injecting even more volatility into a market that’s seen weeks of turbulence amid the raging Mideast conflict.
Roughly $5.7 trillion in notional options tied to individual US stocks, indexes and exchange-traded funds are set to expire on Friday in the quarterly event that traders have dubbed the “triple-witching” - the largest March expiry in Citigroup Inc. data going back to 1996. That figure includes $4.1 trillion in index contracts, $772 billion in exchange-traded funds and $875 billion in single-stock options.
The event, which forces traders to close, roll or rebalance positions, has long carried a reputation for triggering abrupt price swings as large pools of derivatives exposure suddenly vanish.
https://finance.yahoo.com/news/wall-street-faces-5-7-175118951.html?pl2=everyday-hero_editorial