$S&P 500(.SPX)$Today is quadruplewitching day. where several derivatives contracts expire on the same day.

The simultaneous expiration of all of these hedging products creates tons of order flow and repositioning, resulting in significant volatility  and market whipsaws.

It’s called quad witching because these four types of contracts expire on the same day:

Equity Futures Contracts

Options on Individual Equities

Options Contracts on Equity Futures

Options on Equity Indexes

Single-stock futures might also expire on this day, but those are largely irrelevant to the broad market because they’re thinly traded.

Investors are forced to roll their hedges, market makers’ inventories are going to change dramatically, short-term traders are closing their positions to avoid assignment, and arbitrageurs are taking advantage of the mayhem by betting on convergence.

Note: “roll or rollover” means closing your short-dated options or derivative position and replacing it with a contract with a later expiration date. 

The max pain for the SPX is 3900. Expect huge voiltility as the market maker tries to shake people out and gets the most contracts to expire worthless. Invest safe everyone.