Source: Golden Ten Data.

After experiencing a crazy month, U.S. stock investors face a potential obstacle to overcome before the weekend: on Friday, Options contracts related to stocks worth over $4.5 trillion will expire on the latest quarterly "Triple Witching Day."

The calculation method for the nominal value of these contracts may vary depending on the approach used. However, a group of derivatives Analysts at Goldman Sachs calculated the figure to be $4.7 trillion based on the value as of Wednesday's close.

This will make the size of the expiring Options on Friday the largest since December last year, both in terms of nominal value and as a percentage of the value of these contracts relative toRussell 3000 Index.Market Cap. In December last year, contracts worth about $6.6 trillion were either executed or expired worthless.

Due to the market volatility often accompanying Options expiration, there is usually a sense of unease in the market leading up to significant Options expiration dates. On February 21, the last monthly Options expiration date,$S&P 500 Index (.SPX.US)$It has dropped by nearly 2%.

However, after experiencing a period of market turbulence (the S&P 500 Index briefly fell into a correction range earlier this month), some indicate that Friday's Options expiration may actually help restore calm to the market.

Brent Kochuba, the founder of options market data and analysis provider Spot Gamma, stated in an interview a few hours before Federal Reserve Chairman Powell spoke to the media on Wednesday: "If the market rebounds slightly after the Fed meeting, I actually believe the impact of this Options expiration will be quite neutral in terms of its influence."

After the Federal Reserve maintained interest rates in the latest policy meeting and kept the forecast for two rate cuts in 2025 unchanged, the S&P 500 Index rose by 1.1% on Wednesday.

During the recent weeks of declining stock market, investors have been actively buying Put Options. Data from Cboe Global Markets indicates that this has caused the "skew" between out-of-the-money Put Options and out-of-the-money Call Options related to the S&P 500 Index to widen by 7 percentage points earlier this month, the largest gap since 2022.

Put Options give the holder the right, but not the obligation, to sell the underlying Stocks at a predetermined price (i.e., the strike price). Call Options give the holder the right, but not the obligation, to buy Stocks at the strike price.

Kochuba stated that the increasing demand for downside protection has also caused a rise in the one-month implied correlation index at Cboe Global Markets, which tracks the relative Options contracts associated with the 50 largest Market Cap stocks in the S&P 500 Index.Implied volatility) Increased significantly as traders rushed to Buy individual stock Put Options.

Recently, the trading activity in the Options Trading market has been more active than usual. Data from Cboe Global Markets shows that in March, an average of 4 million options contracts related to the S&P 500 Index were traded daily. This is comparable to the record trading volume in February.

However, with the stock market rebounding over the past few trading days, many of the Put options contracts that investors bought earlier have turned into out-of-the-money options, which means they will expire worthless.

This helps shift the positions of the options market makers from a 'negative gamma' state to a more neutral state. When market makers are in a 'negative gamma' state, their hedging activities tend to amplify market volatility, magnifying gains and losses.

The prices of options contracts have also decreased. The Cboe Volatility Index (VIX, more commonly known as Wall Street's 'fear gauge') has fallen from a high of 29.57 earlier this year. The index reported 20.24 on Thursday.

After the options expiration on Friday, the next significant event for options traders will come in about two weeks, when the quarterly options contracts expiring at the end of March will be due. At that time, a large number of Put options positions held by JPMorgan Hedged Equity Fund will expire before the fund rolls over its hedged positions at the beginning of the second quarter.

Kochubai stated that the Fund's Put Options strike price is 5565 points. This oneMutual FundAdopted a collar.Options strategy.(By buying the underlying assets while simultaneously buying Put Options and selling Call Options to reduce overall costs and manage risks), to protect investors from losses while limiting some upside potential of the Fund.

Rocky Fishman, founder of Asym500, noted that given all the other news affecting market trends that investors have recently had to deal with, including the Federal Reserve meeting earlier this week, this week's 'Triple Witching' options expiration may be calmer than usual.

Fishman wrote in an email, 'With a lot of fundamental events happening this week, the technical impact of options expiration is lower than usual.'

"Triple Witching Day" occurs once every quarter, referring to the day when the ETFs, Stocks, and Index Options related to the S&P 500 Index simultaneously expire, happening on the third Friday of March, June, September, and December each year, typically resulting in a surge in trading volume and sudden price fluctuations in the U.S. stock market.

Check large Options Trading transactions in the US stock market to stay updated on the actions of major players!Stock Quote Page > Options > Options Changes > Filter > Custom Filter Conditions, to obtain information on the target Options changes.

Editor/jayden