On Friday June 17th on the last hour of trading you’re going to see something amazing. Volatility. Lots of it.
What is Triple witching you ask? You remember in Harry Potter when Voldemort went long Tesla? . no, not really. Triple witching refers to the expiration of three kinds of securities:
Stock market index futures
Stock market index options
Stock options
Why is it important. Read here on Seeking Alpha before I butcher it. Suffice to say, you should expect a huge amount of volatility when these options reposition.
seekingalpha.com/article/4504033-triple-witching
As an example of what to expect… on the above 3-day charts on October 8th 1998 options expired following a massive 23% sell off. Blood on the streets, the world is ending. 40 days later the market was back to the correction point.
Fast forward to present, exact same set up. 23% sell off, ‘great buy’ signal prints, bullish divergence and options now expiring under 48 hours!
What to expect. A sell off, a panic right up until the last hour of trading tomorrow on June 17th, Friday then a blast off.
This will be the market bottom. Recession cometh in the new-year / 1st quarter 2023.
Ww
S&P 500 options expiration October 1998 source:
finance.yahoo.com/news/october-options-expiration-has-a-history-of-202036849.html
What is Triple witching you ask? You remember in Harry Potter when Voldemort went long Tesla? . no, not really. Triple witching refers to the expiration of three kinds of securities:
Stock market index futures
Stock market index options
Stock options
Why is it important. Read here on Seeking Alpha before I butcher it. Suffice to say, you should expect a huge amount of volatility when these options reposition.
seekingalpha.com/article/4504033-triple-witching
As an example of what to expect… on the above 3-day charts on October 8th 1998 options expired following a massive 23% sell off. Blood on the streets, the world is ending. 40 days later the market was back to the correction point.
Fast forward to present, exact same set up. 23% sell off, ‘great buy’ signal prints, bullish divergence and options now expiring under 48 hours!
What to expect. A sell off, a panic right up until the last hour of trading tomorrow on June 17th, Friday then a blast off.
This will be the market bottom. Recession cometh in the new-year / 1st quarter 2023.
Ww
S&P 500 options expiration October 1998 source:
finance.yahoo.com/news/october-options-expiration-has-a-history-of-202036849.html
Note
Put/Call ratio now seeing levels not reached since March 2020Note
Remember to watch the last hour closely, it will be very telling. Already on the 2hr chart a bullish divergence is building with a high probability 'buy' signal. If history repeats we see a monster DOJI candle printed on the weekly. That will seal the end of the bear market.Note
This week is a short trading week with the Monday holiday, regardless it is an important one. Look for strong demand on long options at current levels. Already seeing this.Note
2% on opening. If that remains the case on close, do not be bear.Trade active
130 points since signal, ;-)The week has now printed a very bullish chart, 4400 points will be the first resistance test. The bears will call it a bear market rally until 4400 is broken, just as in 98.
Trade closed manually
Rotation of options mostly behind us now. The most interesting chart to come out of all that is this 8-day chart below.1) Falling wedge breakout.
2) DOJI prints = huge momentum.
3) The wedge extension measures a target between 5600 and 5700.
Close your call options in that area. Don't rotate to Puts straight away, difficult to say at this time how crazy the market will be when topping. Best to wait.
Note
Up 10% since publishing. 4320 will be a sticking point for resistance, after that the real run will begin.Trade active
We know what happened to the market after Triple witching hour?This Friday we have quadrupole witching hour! Multiple trillions in contract options. Should be an interesting few weeks ahead.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.