Options trading is one of the ways to profit from the volatility in stocks. Options contracts give you the right but not the obligation to buy or sell the underlying stocks before a certain date. So instead of directly investing in those stocks, you can invest in options and build a much larger portfolio with the same investment.
Options contracts are now available on most of the stocks, commodities, currencies and other assets. You can even trade them on futures contracts. Now, most of the people trade stock options. When you trade stock options, you need to know a few dates that are popularly known as the Witching Dates.
All stock options contracts expire on the third Friday of each month. Options on futures expire on different dates depending on the contract. Sometimes, different classes of these contracts expire on the same date. These dates are known as the Double, Triple and Quadruple Witching Dates.
So what are Double Witching Dates? These dates are those when the two different contracts on stock indexes, futures and stocks expire. It can be stock index options and stock options 선물옵션 or stock options and options on stock index futures options. Similarly Triple Witching Dates are those when three different categories of contracts expire on the same date. This happens on the Third Friday of March, June, September and December. In the same way, Quadruple Witching Dates are those when four different categories of contracts expire.
What happens near these dates is that most of these derivative contracts expire on the Third Friday of the above months. So investors and traders are scrambling to close their open positions. This can move the market up and down in a highly unpredictable manner around these dates. Stock markets are highly chaotic around these days. If you are a beginner investor than you should stay away from the market around these dates. Even if you are not a beginner at investing and think of yourself as a experienced long term investor even than you should sit tight around these witching dates.