Today is a stock market “quadruple witching day.” What does that mean?

Financial markets climb and plunge for all sorts of reasons, some of which are rational and some that seem like they are based in hocus pocus. The third Friday of June is typically a quadruple witching day, which sounds like magic but actually describes a logical yet hectic event.

The four things the “quadruple” refers to are the expiration of contracts for stock index futures, stock index options, stock options, and single stock futures. All four types of financial agreement expire on the same day, the third Fridays of March, June, September and December.

Without going into too much detail about each of these complex stock agreements,  they are all based on the idea of a futures contract. A buyer agrees to purchase (or has the option to) a certain amount of stock at a set price on a certain date in the future. Quadruple witching day is that date.

There is often a difference between the agreed-upon price of a futures stock and its actual worth on the expiration day. That difference creates all kinds of opportunities for brokers and investors to make some money or lose it, but their window of opportunity is small: the expiration doesn’t happen till late on the day, close to the closing bell. Perhaps another way to describe the situation is a recipe for volatility.

If all the talk of money depresses you, here’s a fun semi-related fact: Friday is named for the Norse Goddesses Frigg or Freya, and Freya drives a chariot pulled by cats.

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