The Triple witching hour concept, known in English as "Thir witching hour", is well known among investors and traders due to the intensity with which they expect and experience this situation. The third Friday of March, June, September and December is known as triple witch hour, which are months in which quarterly options contracts expire and future on indices and the possibilities on stocks.
The well-known Triple hour witch could be called 'quadruple' after the launch of the futures on stocks.
The qualification of witch is assigned to this day or hour due to the volatility which is recorded in the prices of the securities quoted in a very short period of time. This is due to the fact that the portfolios of these securities that remained protecting the financial derivatives They are to be undone at the time the futures contracts end.
Before the expiration of futures and options there is a climate of tension in the markets, largely because investors with greater financial availability seek to influence the evolution of certain stocks or indices to get more money at the time of expiration. This occurs because in the derivatives market investors earn or lose capital depending on how the assets that are used as a basis to create options and futures act.
In the Spanish market, the Settlement Price of the future Ibex 35 is obtained by making the arithmetic mean of the Ibex 35 between 16:15 and 16:45 hours on the expiration date, taking as a reference a value per minute. During this time, the operators that arbitrate between spot and derivatives must undo their position in the spot market at the rate of one-thirtieth of the portfolio per minute for half an hour. In this way, an attempt is made to emulate the settlement price of the future as well as possible.
The term Triple Witch Hour shows a moment of connection between the different cash and derivatives markets on the expiration day.