Options Expiration and Quad Witching Explained
Updated
Two calendar events with no news in them
Most catalysts on this site deliver new information: an inflation number, a jobs count, a policy decision. Options expiration and quad witching are different. They contain no economic news at all. They matter because the rules of the derivatives market force a large number of contracts to be settled, exercised, closed or rolled at the same moment, and that can change how trading looks on the day.
This guide explains how both events work, why they fall when they do, and what they are commonly said to do to markets, with the caveat that much of what is said about them is folklore rather than reliable pattern.
Options in one paragraph
An option gives its holder the right, but not the obligation, to buy (a call) or sell (a put) an asset at a fixed price, the strike price, up to a set expiration date. The seller of the option takes on the matching obligation. When the option expires, it is either worth something, because the market price is beyond the strike (the option is in the money), or it is worth nothing. Open contracts must be resolved at expiration one way or another.
Monthly options expiration
The third-Friday rule
Standard monthly options on U.S. stocks, exchange-traded funds and major indexes expire on the third Friday of the month. Because the rule is fixed, the dates can be calculated years in advance; this site labels them as computed.
If the exchange is closed on that Friday, expiration moves to the preceding business day. The most common case is Good Friday, a stock market holiday, which can fall on the third Friday of March or April.
Weekly and daily expirations
Over time, exchanges have added many more expiration dates: weekly options on popular stocks and funds, and expirations on every trading day for the most active index products. These now account for a large share of options trading. The monthly expiration still matters because the standard monthly series typically carries the largest concentration of open positions, especially in longer-dated contracts.
AM and PM settlement
How a contract settles depends on the product, and the difference catches people out.
- Stock and ETF options trade until the close on expiration day. In-the-money contracts are generally exercised, and shares change hands.
- Standard monthly S&P 500 index options (SPX) are AM-settled. Their final value is a special opening quotation calculated from the opening prices of all the index’s stocks on the morning of expiration; the calculation waits until every component has opened. The options stop trading the day before.
- PM-settled index options, such as the weekly SPXW series, settle based on closing prices on the expiration date.
Index options are cash-settled; no shares are delivered. Exchange product specifications, such as Cboe’s SPX options specifications, set out the exact rules, including how holidays are handled.
For more detail on the monthly event, see the options expiration explainer.
Quad witching
What it is
Four times a year, on the third Friday of March, June, September and December, the regular monthly option expiration coincides with the expiration of quarterly stock index futures and quarterly stock index options. The combination is known as quad witching, or quadruple witching. The name is informal market slang; no exchange calls it that officially.
Why “quad” and why “triple”
The terminology has a history.
- For years, the simultaneous expiration of stock options, stock index options and stock index futures was called triple witching.
- When single-stock futures began trading in the United States in the early 2000s, they added a fourth contract type, and the event became known as quadruple witching.
- U.S. single-stock futures never became widely used. OneChicago, the main exchange for them, ceased trading in September 2020. After that, only three of the four contract types were expiring together, and some writers reverted to “triple witching”. Many kept saying “quad witching” anyway, and both names have continued to describe the same quarterly Friday.
- In 2026 CME Group announced plans for new single-stock futures on large U.S. companies. Whether and when they trade, and how their expirations line up with the quarterly cycle, is set by CME; check CME Group’s own announcements and contract specifications for current details.
The practical point: “triple witching” and “quad witching” refer to the same day. The name tells you nothing about how much trading will take place.
The S&P rebalance lands on the same day
The quarterly S&P index rebalance takes effect after the close on the same third Friday. Index funds adjust their holdings to match updated share counts and any companies joining or leaving the S&P 500, MidCap 400 and SmallCap 600. That makes the closing minutes of quad witching especially busy.
Table: the two events side by side
| Monthly options expiration | Quad witching | |
|---|---|---|
| When | Third Friday of every month | Third Friday of March, June, September and December |
| What expires | Standard monthly stock, ETF and index options | Monthly options plus quarterly index futures and index options (and single-stock futures, where listed) |
| Coincides with | Weekly expirations | The S&P quarterly rebalance |
| Holiday rule | Moves to the preceding business day | Moves to the preceding business day |
| Typical feature | Elevated options and stock volume | Very heavy closing volume |
What these events are said to do
Heavier trading volume
The one effect almost everyone agrees on is volume. Expiration days, and quad witching days in particular, often see some of the heaviest trading of the month or quarter, much of it concentrated in the closing auction. That reflects positions being settled and rolled and index funds rebalancing, not new views about value.
Hedging and “pinning”
Dealers who sell options usually hedge by trading the underlying stocks or futures. As options approach expiration, those hedges change quickly and then fall away. Some traders argue that this can dampen or amplify price moves in the days around expiration, or keep a heavily traded stock “pinned” near a popular strike price. These are plausible mechanisms, but whether they matter on any particular day is uncertain, and they do not reliably point the market in either direction.
Volatility
Heavy volume is not the same as large price moves. Many expiration days are calm for the index level. When an expiration day is turbulent, the cause is usually news that happened to arrive that day rather than the expiration itself.
The week after
Some commentators describe a change in market behaviour after a large expiration, as hedges tied to expired options disappear. Again, this is a description of a possible mechanism, not a dependable pattern.
Practical points for individual investors
- Know your contract. Check whether an option is AM- or PM-settled, and when it stops trading.
- Understand automatic exercise. In-the-money stock options are typically exercised automatically at expiration unless the holder instructs otherwise, which can leave a holder with a share position, or a short position, on Monday. Brokers set their own deadlines and rules.
- Expect volume, not direction. Busy closes are normal on these days. Nothing about the calendar tells you whether prices will rise or fall.
For the rules behind index changes on the same Friday, see the S&P index rebalance and the separate Russell reconstitution. For the quarterly event on its own, see the quad witching explainer.