From Bloomberg:
Wall Street equities traders are bracing for an unusually large tally of options expiring on Friday, which risks injecting even more volatility into a market that’s seen weeks of turbulence amid the raging Mideast conflict.
Roughly $5.7 trillion in notional options tied to individual US stocks, indexes and exchange-traded funds are set to expire on Friday in the quarterly event that traders have dubbed the “triple-witching” — the largest March expiry in Citigroup Inc. data going back to 1996. That figure includes $4.1 trillion in index contracts, $772 billion in exchange-traded funds and $875 billion in single-stock options.
The event, which forces traders to close, roll or rebalance positions, has long carried a reputation for triggering abrupt price swings as large pools of derivatives exposure suddenly vanish.
This quarter’s expiration arrives at a particularly fraught moment for markets, with bets on Federal Reserve interest-rate cuts fading as the Iran war has sparked a rally in crude prices and concerns over inflation. Hostilities continued on Thursday amid escalating attacks in the Persian Gulf on energy facilities.
While the S&P 500 Index (^GSPC) is only about 6% below its January record, the Cboe Volatility Index — a key gauge of expected equity swings — is well above its six-month average, underscoring lingering investor angst.