Traders Brace For Friday Volatility As Over $5 Trillion In Options Expire: Could 'Triple Witching' Spoil Fed's Rally?
Portfolio Pulse from Piero Cingari
Traders are preparing for potential market volatility on Friday due to the 'Triple Witching' event, where over $5 trillion in options are set to expire. This could disrupt the recent market rally spurred by the Federal Reserve's rate cut. Goldman Sachs highlights the record-breaking options expiration and recommends hedging with VIX calls.
September 19, 2024 | 8:54 pm
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POSITIVE IMPACT
Goldman Sachs recommends buying VIX calls as a hedge against expected volatility, with the VIX currently below its multiyear average but predicted to rise.
Goldman Sachs predicts an increase in the VIX due to macroeconomic conditions and the 'Triple Witching' event, recommending VIX calls as a hedge.
CONFIDENCE 95
IMPORTANCE 80
RELEVANCE 90
NEGATIVE IMPACT
The Invesco QQQ Trust (QQQ) may face volatility as tech stocks have underperformed in previous 'Triple Witching' events, with notable declines in March and June.
Tech stocks, represented by QQQ, have historically underperformed during 'Triple Witching' days. With significant options expiring, similar patterns may occur.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 70
NEGATIVE IMPACT
The SPDR S&P 500 ETF Trust (SPY) may experience volatility due to the 'Triple Witching' event, as historical data shows the S&P 500 often struggles during these periods.
The SPY tracks the S&P 500, which has historically seen declines during 'Triple Witching' days. With a record $5 trillion in options expiring, volatility is expected.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80