Written by:
Image
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades.

Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

View all posts
Updated November 11, 2020

What is Witching Hour?

The witching hour is the last hour of the trading day.

How Does Witching Hour Work?

The witching hour occurs between 3 and 4 p.m. EST. This is when traders often rush to close out their positions, and thus trading volume can be high.

On quadruple witching days, and especially during the witching hour, many investors attempt to unwind their positions in their futures and options contracts before the contracts expire. (Quadruple witching refers to the day on which S&P futures, S&P index options, stock options, and stock futures expire.) This activity frequently includes repurchasing contracts and closing out other positions meant to hedge against these contracts.

Why Does Witching Hour Matter?

Witching hours are usually accompanied by considerable volatility in trading volume and stock and derivative prices. As a result, investors can anticipate and plan for the potential effects of these relatively turbulent trading days.

Although index futures and options generally share simultaneous expirations on the third Friday of every month, quadruple witching days only occur on the third Friday of every March, June, September, and December. The last hour of these trading days, from 3 to 4 p.m. EST, is referred to as the quadruple witching hour.

Quadruple witching is similar to triple witching, which only includes the expirations of index futures, index options, and stock options.

Ask an Expert about Witching Hour
At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Witching Hour.
Be the first to ask a question

If you have a question about Witching Hour, then please ask Paul.

Ask a question

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Witching Hour, then please ask Paul.

Ask a question Read more from Paul

Read this next

Paul Tracy - profile
Ask an Expert about Witching Hour

By submitting this form you agree with our Privacy Policy

Share
close
Don't Know a Financial Term?
Search our library of 4,000+ terms