Understanding Quadruple Witching Hour

Today is a quadruple witching hour day for U.S. markets, with a little help from CNBC, here is what that means:

Witching hours occur when financial contracts—specifically options and futures—end on the third Friday of a month.

The time periods—double, triple, quadruple—reflect the number of contracts that expire.

Traditionally, all contracts expire in the same hour—thus the name witching hour—usually the last hour of trading.

However, some contracts for all three time periods can expire at the beginning of a trading day as well...

Quadruple witching happens when three related classes of options and futures contracts expire, along with the individual stock futures options.

Like triple witching, quadruple witching is the ending of contracts on the third Friday of every March, June, September, and December...

On the day of a quadruple witching, many investors attempt to end their futures and options positions before the contracts expire. This activity often includes repurchasing contracts and/or closing out market positions.

Quadruple witching days are usually accompanied by considerable volatility in stock and derivative prices, as well as increased trading volume.