Financial encyclopedia

In the American market, investors often hear the "four witch days curse". It is said that the stock price will drop sharply every four witch days. Is this true? What exactly is Four Witches Day? What is the impact on investors?

What is Four Witches Day?

"Four Witches Day" is Quadruple witching day in English. It has four days every year, which is the third Friday in March, June, September and December in the US market, and the last Four Witches Day in 2023 is on December 15th.

During the four witch days, the market price will fluctuate greatly because of the "settlement date" of derivative financial products in the American market. The derivative financial products settled are: stock index futures, stock index options, individual stock futures and individual stock options.

Impact on the market?

It is also because the above four kinds of derivative products are due, so investors in the market need to close their positions, or switch positions to contracts with further maturity dates, which also causes the week of four witch days, so the market transactions will be very hot, the fluctuations will be more intense, and the trading volume will be much larger.

Impact on investors?

According to the historical experience, the Four Witches Day has no obvious influence on the long-term price, so long-term investors need not worry too much, but short-term traders must pay special attention to the situation of the Four Witches Day, especially in the week after the Four Witches Day, the fluctuation of the US stock market will be more intense, providing more profit space and higher operational risks.

The stock price fell sharply on the fourth witch day?

The historical trend chart of S&P 500 in recent years shows that the trading volume increases greatly every four witch days, but it does not mean that the stock price index will perform better. According to statistics, the rising probability of each index is usually higher in the week before the four witch days. However, after the end of the four witch days, the decline probability of each index will also increase.