Editor’s note: Today, we’re handing the reins to colleague Larry Benedict – a market wizard and legendary hedge fund manager.

He’ll tell you about the four predictable times a year when potential trading profits skyrocket…

Here’s Larry…

Every year, there are four predictable times when the profit potential for trading skyrockets.

It has nothing to do with earnings reports… or a release of economic data… or anything like that.

It’s much more advanced. The elite hedge funds of the world utilize it for big trading returns.

But as advanced as it is on the surface, it’s simple to understand just why these times are so profitable and so predictable… and how anyone can use them to amplify their profits.

So what exactly is it?

The Four Most Profitable Times to Trade Every Year

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, quarterly contracts on index futures, index options, stock options, and stock futures all expire on the same day.

This ignites a flurry of trading volume, as all the world’s money managers and hedge fund traders ramp up their activity.

And the final result? A large spike in volatility across all asset classes… lasting all week.

Where there’s volatility, there’s a big trading opportunity.

Let’s break down the four markets that expire on Quad 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 – buying if they believe the index will rise and selling if they believe it will decline.

    At expiration, the existing position is exercised, and a profit or loss is settled into the investor’s account in cash.

  • Index options control the right to buy/sell financial indexes, like the Dow or S&P 500, for a specific price and certain period of time.

    Index options give investors the right, but not the obligation, to transact the index. The result of the trade is determined by the index price relative to the option’s strike price on the expiration date.

    Index options don’t offer any ownership of the individual stocks. Instead, the transaction is cash-settled, giving the difference between the option’s strike and the index value at expiry.

  • Stock options give a buyer the right, but not the obligation, to complete a transaction of the underlying security on or before a specific date and for a preset price called a strike price.

    Options can be purchased to speculate on a price increase or decrease of a specific underlying security – usually a stock or ETF.

  • Single stock futures are agreements to buy or sell a specific security at a determined price at a specified future date.

    Single stock futures are obligations to take delivery of shares of the underlying stock at the contract’s expiration date. Each contract represents 100 shares of stock. However, holders of stock futures don’t receive dividend payments.

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, during Quad Witching Days, the most obvious effect is a sharp increase in trading volume and volatility.

And Quad Witching Day is a good time to trade options, in particular, because of this volatility and volume.

When volatility rocks the markets, options premiums inflate. And when they do, it can increase the potential gain in options trades.

And the best way to take advantage of this added volatility is to buy options expiring on Quad Witching Day.

Free Trading Resources

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career – at zero cost to you. Just click here to check it out.

An Example Trade

The best time to trade options, in my view, is in the week leading up to Quad Witching Day – not the day itself.

That’s how we’ve made some incredible wins in my S&P Trader and Opportunistic Trader advisories.

We just added a new one to the books last month.

On Monday, March 11, we bought call options on the S&P 500 Index (SPX) in anticipation of the Quad Witching on that upcoming Friday.

But we didn’t have to wait till the end of the week to profit.

The very next day, those call options were already up just over 49%. We went ahead and booked that gain in just one day.

That’s the kind of trade a Quad Witching makes possible.

So if you’ve never paid attention to these events, consider adding them to your trading calendar.

They can be a powerful way to amplify your profits in a short window…


Larry Benedict
Editor, Trading With Larry Benedict