The Biggest "Triple Witching" in History Approaches – Will the Israel-Iran Conflict Make U.S. Market Trading Wackier?

TradingKey - On Friday, June 20, U.S. financial markets will face the much-anticipated "Triple Witching" day, when stock index futures, stock index options, and stock options all expire simultaneously. This event is typically accompanied by high trading volume and increased market volatility.

According to SpotGamma, more than $6 trillion worth of stock, ETF, and index-related option contracts will expire this Friday, marking what could be the largest Triple Witching day in history.

It’s worth noting that, based on records from Dow Jones, this will be the first monthly options expiration day since 2000 to occur immediately after a market holiday. U.S. markets were closed on June 19 for Juneteenth.

This unusual overlap has led to mixed views among market participants regarding potential volatility. Historically, large volumes of expiring derivatives have led to heightened trading activity and increased uncertainty, with Wall Street traders and media often amplifying these risks.

Some analysts suggest that given many investors may have extended their weekend holiday, trading volume on this Triple Witching day might be lower than usual. However, Triple Witching days are typically among the highest-volume days of the quarter, which means Friday could see some “weird” or erratic market behavior, and possibly some turbulence.

Israel-Iran Conflict Adds Uncertainty

The ongoing Israel-Iran conflict further complicates the outlook. With both sides continuing to launch attacks and the possibility of U.S. involvement, the CBOE Volatility Index (VIX) has already risen above 20, signaling rising risk aversion.

Increased geopolitical volatility may push up the premiums traders pay for options contracts, as hedging demand rises.

Brent Kochuba, founder of SpotGamma, noted that he originally expected volatility to subside ahead of the holiday weekend, but recent geopolitical developments may prevent that from happening.

Fed's Stagflation Signal Also Looms

The recent June Federal Reserve meeting also left behind a stagflationary warning. FOMC officials signaled that inflation could rise significantly in the coming months due to Trumptariffs, while revising downward their GDP growth forecast for 2025, and upward their unemployment rate and core PCE inflation forecasts.

Although the Summary of Economic Projections (SEP) maintained the expectation of two rate cuts in 2025 , the Fed’s more hawkish tone — including a growing number of officials who now expect fewer or no cuts at all — adds pressure on financial markets.