S&P 500 Falls as 'Triple Witching' Jolts Nvidia: Markets Wrap
What is "triple witching" and how does it affect the markets?
"Triple witching" is a term used in the stock market referring to the expiration of three types of contracts: stock options, stock index futures, and stock index options2. This event occurs quarterly on the third Friday of March, June, September, and December5. It can cause increased trading volume and volatility in the markets as traders adjust their positions.
What are the concerns regarding equity concentration risk in tech investments?
Equity concentration risk in tech investments is a concern due to the potential for significant losses if a single stock or a few stocks dominate the portfolio4. This risk can be magnified due to the high volatility in the tech sector and the tendency for tech stocks to be highly correlated1. Diversification and regular rebalancing can help manage this risk.
What was the trading volume change for the S&P 500 during this event?
The trading volume for the S&P 500 during the event was 45% above the past month's average. This increase in volume was due to the expiration of contracts and investors adjusting their positions, leading to heightened caution among stock traders.