(Introducing EXECUTION MATTERS, a new Traders Magazine content series focused on the topics most important to traders and technologists in US equities and options markets. EXECUTION MATTERS is produced in collaboration with Lime Trading Corp.)
The next quadruple witching event, scheduled for Friday, September 20, will see the simultaneous expiration of four major financial instruments: stock index futures, stock index options, stock options, and single stock futures.
These quarterly expirations—occurring in March, June, September, and December—often lead to a surge in market activity, as traders rush to close or roll over positions, particularly in the final hour of trading. On March 17, 2023, for instance, over 9.35 billion S&P 500 contracts were traded, followed by 8.22 billion contracts on December 15, 2023, marking the two highest-volume days of the year.
For electronic brokers and trading infrastructure providers, quad witch days are comparable to Black Friday in retail: a deluge of orders and messages must be handled with speed, precision, and reliability. Failure to perform seamlessly under these conditions can lead to costly delays, frustrated traders, and ultimately, lost business.
“Quad witch is one of the biggest trading events of the year,” said Johan Sandblom, President & Head of Business Development at Lime Trading Corp. “To handle it well, clients need to rely on technology that is optimized both for performance and throughput.”
“Trading of stock index futures, stock index options, stock options, and single stock futures increases in four special sessions a year,” financial services company Santander said in a 2023 report about quadruple witching. “The concurrent expiry dates “are investors’ last chance to exercise their options, confirm their futures or extend contracts to the next expiry date. In the last hour of trading, markets are flooded with orders, raising volatility,” the report stated.
Recent market events underscore the importance of reliable trading systems. On August 5, 2024, an early market downturn triggered outages at major retail brokerages including Charles Schwab, Vanguard, and Fidelity. While retail investors faced delays and missed opportunities, the stakes are far higher for professional traders, hedge funds, and firms relying on high-frequency strategies during peak events like quadruple witching.
A system failure under such conditions could prove catastrophic for firms whose business depends on uninterrupted, high-throughput execution. “Everyone is good when there’s nothing going on,” Sandblom pointed out. “What’s critical—and often differentiating—is the ability to maintain performance and avoid slowdowns on the highest-volume days.”
Lime Trading’s low-latency platform is engineered to handle these exact conditions. “Our systems are designed to meet the demands of systematic and electronic traders,” said Sandblom. “On the most active trading days, we routinely process over 30 million messages, with much of the volume concentrated toward the market close. The platform enables our clients to execute their strategies without bottlenecks, even during events like quad witch.”
