Quad-Witching Day Hit The Market Last Friday, Which Only Happens 4 Times A Year: What's The Impact?

Friday's trading session was a "quad-witching" day for the market, which usually results in increased volatility and can create more extreme moves to either the upside or downside. A quad-witching day in the stock market refers to a third Friday of a month in which stock options, single-stock futures, index futures, and index futures options derivatives all expire on the same day. 

CC Lagator, the founder of OptionsAI, joined Benzinga's PreMarket Prep last Friday morning to discuss the quad-witching day and what it could mean for stocks.

"This expiration feels a little bit different than the last few," Lagator said. "These last two weeks leading up to this expiration, it's a very odd situation where the market is basically sideways. The SPX is where it started in March, but if you've been trading intraday and day-to-day this has been an extremely volatile market."

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To Lagator's point, the SPDR S&P 500 Trust ETF SPY is up 2% in March. But, the index has had very volatile day-to-day moves, in addition to volatile intraday moves. For example, on Thursday of last week, $SPY was trading down more than 0.8% from its open price late in the afternoon. But, with just 25 minutes left in the regular trading session, the index rallied more than .5%, closing more than $2 higher than its lows of the day. 

Last Friday's trading, which featured the quad-witching of different contracts and futures expiring, also saw increased volatility, with the S&P 500 dropping more than 0.5% in a two-hour span from around 10:30 am ET to 12:30 pm ET. 

The three remaining quad-witching days in the stock market will be on June 21, Sept. 20 and Dec. 20 this year. Watch the full PreMarket Prep interview with Lagator below.

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Image created using artificial intelligence with Midjourney.