The Market On Friday - Quadruple Witching

At 7:55 a.m. futures are ever so slightly up.

Today is the day of the quadruple witching hour which occurs only four times a year. It is as a day of extreme volatility, so watch out.

Let's go to the definitions -

This is similar to the triple witching hour, except that the quadruple witching hour sees also the expiry of SSFs.

Quadruple witching days occur on the third Friday of March, June, September and December. source

How It Works/Example:
Although index futures and options generally share simultaneous expirations on the third Friday of every month, quadruple witching days only occur on the third Friday of every March, June, September, and December. The last hour of these trading days, from 3:00 to 4:00 p.m. EST, is referred to as the quadruple witching hour.

On quadruple witching days, and especially during quadruple witching hours, many investors attempt to unwind their positions in their futures and options contracts before the contracts expire. This activity frequently includes repurchasing contracts and closing out other positions meant to hedge against these contracts.

Why It Matters:
Quadruple witching days are usually accompanied by considerable volatility in stock and derivative prices, as well as increased trading volume. As a result, investors can anticipate and plan for the potential effects of these relatively turbulent trading days. source

Reuters: Stock futures flat ahead of options expiration

Friday marks the quarterly expiration and settlement of four different types of September equity futures and options contracts -- a convergence known as quadruple witching that can lead to greater volume and volatility as traders unwind positions.

U.S. stocks slipped Thursday after a three-day run-up on concern that recent gains were overextended.