The Four Most Profitable Times to Trade Each Year

Every year, there are four specific, completely predictable times where 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 – something the elite hedge funds of the world utilize for big trading returns.

But as advanced as it is on the surface, it’s actually 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 Single 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.

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 – 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, which are cash payments to shareholders from a company’s earnings.

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 Quadruple Witching Days, the most obvious effect is a dramatic increase in trading volume and volatility.

For example, in recent years, volume in futures and options contracts was 30-50% higher on the day before a Quadruple Witching Friday.

So, we understand the effect Quadruple Witching has on markets…

But what’s crucial to understand is how to use it to identify winning trades.

How to Use Quad Witching Day

Quadruple Witching Day is a good time to trade options, in particular, because of what I just mentioned – volatility.

You see, when volatility rocks the markets, options premiums inflate. And when they do, it can amplify the potential gain in options trades.

Say you buy a put option – which gives you the right, but not the obligation, to sell a security at a specific price by a specific date. If the underlying security is trading below the strike price of that option before the expiration date, then the put is valuable.

But on volatile days like Quadruple Witching Days, options premiums tend to inflate more than normal. Add to this any downside action in a stock or index, and you could potentially make a huge profit trading puts.

Call options are essentially the opposite of puts (they give you the right, but not the obligation, to buy a security at a specific price by a specific date), and they also tend to inflate in volatile environments.

Call option premiums actually went up during the Black Monday crash of 1987 – even though the market was tanking. That was an extreme scenario. But on especially bullish days, volatility can rise – and call option premiums along with it.

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

An Example Trade

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

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

In September 2022, we had a perfect setup to illustrate.

If we look back, the market had risen 7% in four days.

This was right before the release of an immensely important Consumer Price Index (CPI) report… and the market was just waiting for a cold, inflation-infused dose of reality.

So, with all this in mind going into the Quad Witching week, we recommended our trade with confidence. It just didn’t make sense for the market to be up so much.

And in just 24 hours, we exited that trade for a 130% gain.

Some readers did even better…

This was my very first trade with your service, and I’m happy to report that I made over $1,500 on only one option. I would love to see more of these as it’s my first time trading options this way. Thank you so much!

– Kumiko O.

What a treat to have such a quick move that was so profitable… $7,000! Thank you! I’m hopeful for the rest of this year!

– Karen W.

The cost for three puts yesterday was $2,553. I sold just 24 hours later for $5,580! This is a 218.5% return and $3,027 profit! It’s an understatement to say I’m delighted!

– Peter M.

And while the next Quad Witching is still a couple of months away in March, now isn’t too soon to start learning how to trade using my options strategy.

In fact, even outside of these special weeks, our trades can generate an average of $1,145 in a month…

So, if you’d like to learn how it works, I’d encourage you to go right here to watch my recent interview.

With the volatility we’ve experienced over the past year, I don’t want any of my readers to miss out on these kinds of potential returns in 2023.

Regards,

Larry Benedict
Editor, Trading With Larry Benedict