Triple Witching Day

Triple Witching Day

 

This week featured some significant market events and some wild times in our trading rooms here at BlackBoxStocks. There was the FOMC meeting, monthly options expiration, and triple witching all happened this week. These are events that can heavily move markets, and the latter is, to some degree, bestowed with some mythos it may or may not deserve. We’ll discuss what triple witching is today, but first let’s look at the trading days of this week, significant market events this week, and zero in on just a few of the things that happened in our trading rooms throughout.

 

MONDAY featured a continuation of the downtrend from Friday, and the rest of the week featured a steady upward climb.

 

TUESDAY: I have lately been writing about the choppiness and volatility that has been a feature of the market. It has been in a downtrend all year, and here is an observation: You know there is massive volatility when $VXX gets halted three times. This ticker is an Exchange Traded Note (ETN) based on the Chicago Board Options Exchange Volatility Index, widely known as VIX.
BlackBoxStocks Twitter
There was chatter in our trading rooms about how this seems indicative of the market lately that a volatility ETN would undergo three volatility halts. It seems this is a proper sign o’ the times. Tuesday also featured the following option alert that came across our scanners:
Option Trading

 

This is an example of our “steady bullish” options alert which denotes there is heavy buying in a particular option contract. In this case, the GOOG 3/25 dated $2700 strike call contracts were alerted at 9:18 am. The contract price at time of alert was $14.30. One of our full-time moderators, Swan, bought this contract at 10:18am at 19.58 per contract and sold them less than an hour later for $30.0o. Our trading rooms were abuzz with this buy and others that were happening throughout the week. AMD is an example of another ticker that was discussed favorably in our live trading rooms. Regardless, at the end of the day on Tuesday, it seemed some optimism had reentered some parts of the market. In fact, this might have been near the beginning of a noticeable change in the flow.

 

WEDNESDAY: The FOMC meeting confirmed a .25% rate hike and the expectation that rate hikes are expected at every meeting this year but they are not married to this and will remain flexible. The market reacted to this and rose sharply after Chairman Powell’s press conference. There was plenty of chatter in our trading rooms regarding this as well as constant encouragement from moderators on Voice to be patient and play whatever the market manifests.

Wednesday also featured the largest Dark Pool print we have ever seen. Someone transacted 1.7 million shares of Amazon at $2,950.00 per share for a total of more than five billion dollars.
Options Scanner

 

THURSDAY opened and it appeared the Fed rally momentum was slowing, but as it turned out a slow grind up is a good way to describe this day. Within the BlackBox community, we have been seeing more flow plays sent out to members than in recent weeks. Those are hand-picked flows that are sent to our app. Generally, moderators started commenting in the latter few days of this week that good flow might be returning to the market. Though it is entirely possible to scalp flow, the real gains happen from swing trading top-tier flow. And in the past couple of months, people have been less willing to do this. Would Friday bring even more flow plays to the BlackBox app and more institutions deploying smart money into options contracts?

 

WHAT IS TRIPLE WITCHING?

FRIDAY featured the monthly OPEX and the quarterly “triple witch.” This is when stock options, stock index futures, and stock index options all expire on the same day, and it happens four times a year. This happens in March, June, September, and December on the third Friday of the month and it can result in some very odd price action and increased trading volume. Typically, this can provide some really good intraday opportunities for advanced traders, but newer traders might want to beware of the triple witch.

In fact, Friday was another day up in the markets. Strong flow continued, and…to put it simply… A lot of people in our trading room made nice profits this week. This week featured seven hand-picked flow trades sent to members’ apps, and this was the first time in several months that there was that much convincing flow. Flows in JD, PYPL, CCJ, LYV, MTCH, CCJ, and DAL were all convincing and provided to members for consideration. BlackBoxStocks is growing, and we are adding new features over the next two weeks. We hope to see you in the community very soon.