Quad Witching Pull the Rug Surprise - Options Expiring Today

September 16, 2022

Happy quad witching Friday!

Quadruple witching happens every quarter — it’s when options and futures on indexes and equities expire (on the third Friday in March, June, September and December).

Back in the days of trading on the floor, today would be a busy day because positions that expire need to be rolled forward.

We normally see the markets rise into expiration day, but not this week!

Major indices plunged on Tuesday after inflation numbers came in hotter than expected.

The reaction dropped the S&P 500 down 4% seeing one of the worst weeks since 2020.

Even though I've said this is a short-term bear rally, this weeks drop surprised me.

But this is why I love trading options because I know my max risk at all times.

More importantly, it allows me to keep my emotions in check and never overreact.

We added a new position (CHPT) this week that had a good profit yesterday, but thought it would keep rallying today.

Well, I was wrong about that too!

As I mentioned last week, we're going to see more two-sided markets than a continued plunge lower. 

So next weeks reaction to the FOMC on Wednesday will be interesting, but buckle up.

The CBOE Volatility Index (VIX) closed this week at 26.30.

That’s 4 points lower from last week, but indicates we will continue to see those 100 point swings in S&P 500. 

Now let’s talk shop.

Portfolio Update

Today, this position will expire.

SLB Sept 16, 2022, $42/$47 call spread

Unfortunately, we don’t have more time for this to play out.

There’s nothing that you need to do, and they will be removed from your account over the weekend.

Taking losses isn’t fun, but without the bitter, the sweet isn’t as sweet.

Here’s a recap of what we did this week.

On Monday:

  • Buy-to-open the CHPT Sept. 23, 2022, $18.50/$20.50 call spread

Right now, we’re holding:

  • SLB Sept 16, 2022, $42/$47 call spread
  • VTRS Oct 21, 2022, $10 call
  • CHPT Sept. 23, 2022, $18.50/$20.50 call spread

Have a great weekend and it's time to enjoy a ice cold spicy margarita - TGIF! 

Joshua M. Belanger

Joshua M. Belanger
Joshua Belanger is founder of CounterVest and the editor of Hot Money Trader. He has been providing ordinary investors blockbuster returns since 2008. In 2018, the average return of Hot Money Trader beat the markets by over 15%