The final trading day of this week may bring significant turbulence to Wall Street as traders brace for an unprecedented options expiry event.
According to data from Goldman Sachs, over $7.1 trillion in notional value of options contracts are set to expire this Friday, setting a historic record. This day, known as "quadruple witching," sees the simultaneous expiry of index futures, index options, single-stock futures, and single-stock options, often amplifying trading volume and market volatility.
In this record-setting expiry event, approximately $5 trillion in exposure is tied to the S&P 500, with another $880 billion linked to individual stocks. Goldman Sachs noted that while December options expiries are typically the largest of the year, this one surpasses all previous records, with notional exposure equivalent to about 10.2% of the total market capitalization of the Russell 3000 Index.
This event unfolds against a backdrop of strong gains for US stocks this year. The S&P 500 has risen roughly 15% year-to-date, trading near 6,770 points on Thursday. The record-breaking options expiry could become a key variable in year-end market behavior, introducing significant uncertainty.
**The Largest Expiry Event in History** The sheer scale of this options expiry makes it particularly noteworthy. Goldman Sachs analyst John Marshall estimates that over $7.1 trillion in notional exposure will expire today.
Dubbed "quadruple witching" on Wall Street, this event occurs just four times a year—on the third Fridays of March, June, September, and December. On this day, four types of derivatives contracts settle simultaneously, forcing traders and market makers to unwind, roll over, or hedge positions, leading to unusually high trading activity. Goldman Sachs data shows that zero-days-to-expiration (0DTE) options tied to the S&P 500 alone have reached record trading volumes, accounting for over 62% of total options activity, further complicating the day’s dynamics.
**Increased Volatility or "Pinning" Effect?** Such a massive options expiry could have two opposing effects on the market.
On one hand, it may heighten volatility. Jeff Kilburg, founder and CEO of KKM Financial, stated, "I expect trading volume to far exceed normal levels as options traders settle their 2025 gains and losses." He highlighted the S&P 500’s 6,800 level as a critical strike price, where market participants will watch whether bulls can successfully defend the level.
On the other hand, the sheer volume of options could create a "pinning" effect, suppressing price swings instead. Goldman Sachs explained in its report that if a large number of options contracts have strike prices at or near the current market price (i.e., "at-the-money" options), market makers’ hedging activities could "pull" stock prices toward these heavily traded strike levels, stabilizing prices near expiration.
Goldman Sachs identified stocks such as GeneDx Holdings, BILL Holdings, Avis Budget Group, and GameStop as particularly susceptible to pinning, given the high proportion of expiring options relative to their average daily trading volumes.
**Key Technical Levels and Market Sentiment** From a technical perspective, the market is at a delicate juncture. According to SpotGamma, the S&P 500 is currently in a "negative gamma" zone between 6,700 and 6,900, meaning the market is prone to amplified moves—accelerating upward rallies or downward slides.
SpotGamma views 6,800 as a critical "risk pivot." The firm noted that if the index reclaims and holds above 6,800, it could signal the start of a "Santa Claus rally." However, if the index remains below 6,800, downside pressure may dominate, with limited technical support beneath. The firm cautioned that even a rebound to 6,800 could quickly reverse, and only a decisive break above this level would attract new support from put-selling flows.
For investors seeking trading opportunities, SpotGamma suggested bullish strategies like call spreads near the 6,900 strike expiring December 31, while bearish traders might consider longer-dated puts expiring in February or March 2026 to avoid rapid time decay during the holiday period.
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