Every year, there are four specific times when trading profit potential skyrockets.
It’s something the elite hedge funds of the world use for big returns.
But as advanced as it is on the surface, it’s actually simple to understand why these times are so profitable and predictable.
In fact, anyone can use them to amplify their profits.
Let me explain how…
The Four Most Profitable Times to Trade
This event is called “Quadruple Witching Day.” It’s led to some of the biggest trades of my career.
These days occur, like clockwork, on the third Friday of every March, June, September, and December.
Why are these specific days so powerful?
Because on these days, four kinds of quarterly contracts all expire on the same day.
This ignites a flurry of trading volume. All the world’s money managers and hedge fund traders ramp up their activity.
And the final result? We see a large spike in volatility, with big moves up and down, across all asset classes… lasting all week.
And where there’s volatility, there’s a big trading opportunity.
Let’s break down the four markets that expire on Quadruple Witching Day:
Index futures allow investors to buy or sell a stock index with the contract settling on a future date. Investors use index futures to speculate on the direction of an index.
Index options are cash-settled option contracts for indexes, like the Dow or S&P 500, used for hedging portfolios for a specific price and a certain period of time.
Stock options give a buyer the right, but not the obligation, to buy or sell the underlying security for the strike price before the contract’s expiration.
Single stock futures are agreements to buy or sell a specific security at a determined price at a specified future date. They obligate traders to take delivery of shares of the underlying stock at the contract’s expiration date.
So how do all these expirations impact the market?
This is a busy time, with options exercising… delivery… hedging… arbitrage… and speculative trading activity hitting a peak.
So leading up to Quadruple Witching Days, the most obvious effect is a dramatic increase in trading volume and volatility.
And what’s crucial to understand is how to use this volatility to identify winning trades.
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How to Use Quad Witching Day
Quadruple Witching Day is a good time to trade options because of volatility.
When volatility rocks the markets, options premiums inflate. And when they do, it can amplify the potential gain in options trades.
The best way to take advantage of this added volatility is to buy options that expire on Quadruple Witching Day.
And the best time to trade options is in the week leading up to Quadruple Witching Day – not the day itself.
That’s how we’ve made some incredible wins in my S&P Trader and Opportunistic Trader advisories.
In fact, we added another win just this week.
On Tuesday, we entered and exited our trade for a 50% gain in just 3 hours.
Take a look below to see how it played out:
The latest Consumer Price Index (CPI) report came out that morning… and announced that inflation had slowed to 3.1%.
That played into the market’s recent exuberance and expectation that the Fed would start cutting rates next year. And we sold half our trade an hour and a half later.
We held the remaining half to see whether the market would turn up further.
But with the excitement easing and the market flattening out, we decided to take the rest of our win and closed out the trade around 12:45 p.m. for a blended 50% gain.
And while it’s too late to take part in this week’s quad witching trade, now isn’t too soon to start getting ready for the next one.
After all, even outside of these special weeks, my trading strategy has generated incredible returns…
In The S&P Trader, if you just traded one contract per trade this year, you’d have an additional $11,456 in your pocket. If you traded two contracts, you’d have $22,912.
And much like this quad witching trade, you don’t have to wait long to profit. Our trades typically close in 8 hours or less…
If you’d like to learn how it works, I’d encourage you to go right here to watch my recent interview.
I don’t want any of my readers to miss out on these kinds of returns in 2024.
Regards,
Larry Benedict
Editor, Trading With Larry Benedict
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Did you take part in our quad witching trade this week? Let us know at [email protected]