Today (20th) is 'Triple Witching Day' for US stocks, involving the highest recorded expiration of $6.5 trillion in contracts. Coupled with the ongoing tensions in the Middle East, this is expected to significantly increase volatility and trading activity in both traditional and cryptocurrency markets. Although US stock futures are down, the decline is gradually narrowing compared to yesterday, and Bitcoin continues to hover around $104,000, with low trading volume over the past two days.
What is 'Triple Witching Day'?
Triple Witching Day is defined as an important event in the financial markets, occurring on the third Friday of March, June, September, and December each year. Today marks the second Triple Witching Day of this year, involving the simultaneous expiration of three main types of derivatives: stock options, stock index futures, and stock index options. Since the 1980s, this event has been referred to as 'Triple Witching Day' due to its unusual market activity being likened to a mysterious 'witching hour,' particularly in the last hour before trading ends, known as the 'Triple Witching Hour.' In the past, the expiration of single stock futures could make it a 'Quadruple Witching Day,' but since 2020, the US has ceased trading such futures.
Triple Witching Day typically leads to surges in trading volume and price volatility, especially affecting stocks with high derivative trading volumes and low market capitalization. In recent years, due to the splitting of option expiration times, the impact has weakened. However, this Triple Witching Day, occurring after the US 'Juneteenth' holiday and amid heightened tensions in the Middle East, has created the highest expiration contract size in history, making it a focal point for the market.
The highest expiration of $6.5 trillion in history
Today marks an unprecedented expiration of contracts on Triple Witching Day, with Bloomberg reporting that contracts with a notional value exceeding $6.5 trillion will expire, breaking the previous record. According to Investopedia data, the last significant Triple Witching Day occurred in 2019, with a total trading volume of $6 trillion. The expiration of $6.5 trillion in options and futures may amplify market activity; historical data shows that past Triple Witching Days have seen trading volumes double. As mentioned, 2019 recorded 10.8 billion shares traded, far exceeding the average of 7.5 billion shares. If history repeats itself, significant market volatility is expected tonight.
Analyst predictions and market expectations
Recently, there have been few specific predictions from analysts regarding this Triple Witching Day, but market analysts generally expect increased volatility. Research institution Asym 500 believes that since May, intraday volatility in US stocks has been relatively moderate. This 'anchoring effect' has been facilitated by a significant number of investors engaging in put option trading since early 2025, causing the S&P 500 index price to converge towards the strike prices of options with high trading volumes.
MarketWatch analysis still leans towards the idea that the expiration of $6.5 trillion in contracts could create a 'complex market environment, making the stock market prone to volatility.' Consistent with historical trends, a 2021 analysis report by Nasdaq also noted that Triple Witching Day typically triggers sharp price fluctuations. FXStreet pointed out that the intraday price range for such events expands by nearly 7%, with average returns lower by 0.72% compared to regular days, suggesting that trading towards the end of the day may lean bearish.
However, the market direction remains unclear, and investor sentiment and macroeconomic conditions will influence the outcome. According to AInvest's historical data analysis, major indices have a 60% chance of recording positive returns on Triple Witching Day, driven by increased trading volume. However, this is not guaranteed and varies year by year.
Potential impact on the cryptocurrency market
Triple Witching Day primarily affects traditional markets, but cryptocurrencies like Bitcoin and Ethereum have recently been associated with stock market volatility. Increased activity and price fluctuations in the stock market may spill over, leading to heightened volatility in major cryptocurrencies. Additionally, cryptocurrency options (such as Bitcoin options) sometimes also expire on Triple Witching Day. Although there are no significant expiration events today, the market is still largely affected by the situation in the Middle East. However, as the events of 2019 showed, it may directly impact cryptocurrency prices. Investors should anticipate potential volatility and consider diversification and risk management strategies.
