Legal Definitions - triple witching session

TRIPLE WITCHING SESSION

A triple witching session is a day when three different types of financial contracts expire simultaneously. These contracts include stock index futures, stock index options, and stock options.

On a triple witching session, investors may experience increased volatility and trading activity as traders close out their positions in these contracts. For example, if an investor holds a stock option that is expiring on a triple witching day, they may choose to exercise the option or sell it before it expires. This can lead to a surge in trading volume and price fluctuations.

Another example is when a trader holds a stock index future that is expiring on a triple witching day. They may need to buy or sell stocks to offset their position in the futures contract, which can also impact the overall market.

A triple witching session is a significant event in the financial markets that can cause increased volatility and trading activity. It occurs when three different types of financial contracts expire simultaneously, which can lead to a surge in trading volume and price fluctuations. Investors and traders need to be aware of these days and take appropriate measures to manage their positions and minimize their risks.