In the financial markets, there is a special day called a quadruple witching day. That may sound like hocus pocus, but it actually describes a logical, if hectic, event.
Let’s break it down. The quadruple refers to four stock agreements that all expire:
- Stock index futures (buying/selling stocks on a future day)
- Stock index options (the right to buy/sell a stock on financial indexes, like the Dow, for a certain period)
- Stock options
- Single stock futures (trading stocks in the future at a price agreed-upon today)
All four types of financial agreement expire on the same day, the third Fridays of March, June, September, and December.
More From Dictionary.com: Why Are People Calling Their Stocks “Stonks”?
So, why witching day or hour? Witching refers to the witching hour, midnight, referring to the old idea that this is when witches come out and magic is afoot. During the expiration of such stock agreements, trading can be more volatile—and stocks can plunge. So, it’s a period of wild activity, like a witching hour. Triple-witching hour (the last hour of trading, 3–4 pm on these Fridays, when three types of securities expire) has been recorded since the 1980s.