Postholiday trading is usually more subdued, but this month’s biggest-ever options expiration could shake things up.

On Friday, option traders will face something unprecedented: A monthly options-expiration event coming one day after a holiday when major U.S. stock exchanges will have been closed for business.

Contracts tied to more than $6 trillion in stocks, ETFs and indexes are due to expire during the latest “triple witching” options-expiration event — potentially the largest sum on record, according to data from SpotGamma.

Source Cryptopolitan

Today, Friday, March 21, over $4.7 trillion worth of options are expiring in the stock market, according to trading data from Goldman Sachs. That number is based on notional value, which includes all the assets tied to the contracts.

This expiration includes $2.8 trillion in S&P 500 options and $645 billion in single stock options, making it the largest options expiration since December 20, 2024, when the total was $6.6 trillion.

The S&P 500 options alone carry a spot price of 5675. These expiring contracts account for 8.2% of the entire Russell 3000 market cap, which is slightly below the 9.3% that expired in December. But this still makes it the second-largest notional expiration in less than a year. The amount of money tied to these contracts is large enough to move index prices within hours. Traders have been watching it all week.

Volatility jumps while VIX climbs again

The expiration is happening while volatility is rising across the board. The Volatility Index (VIX) started climbing again this week, just like it did ahead of the December 20 options expiration. That earlier jump happened while the Santa Claus rally started fading, and stocks began to dip near the end of 2024.

Now, the pattern is repeating. The VIX is already up, and it’s not coming back down yet. This time, though, the position structure is different. According to data shared by SpotGamma, 68% of the S&P 500 options expiring today are puts, while single stock options show 54% puts. That puts more downside exposure into today’s session.

In December, the setup leaned the other way. The call-to-put ratio before that expiration was 10-to-1, yet the S&P 500 still closed up 1.1% by the end of that session. That kind of move today would catch a lot of people off guard. But traders aren’t betting on that repeat, at least not based on today’s position data.

Triple witching and heavy volume hit at the same time

This is also a triple witching day, meaning stock options, stock index futures, and stock index options are all expiring at once. Traders also call it quadruple witching if single-stock futures are added to the mix. These kinds of sessions have usually led to negative returns when you look back over the past ten years.

The volume of options contracts is exploding again too. Over the last five trading days, the average options contract volume has climbed to around 70 million. That’s double what it used to be. Before 2020, this number never even hit 35 million.

A lot of this surge is coming from 0DTE options, which are contracts that expire the same day they’re bought. These now make up 55% of all option volume, based on data shared by Goldman Sachs. That means traders are doing same-day bets more than ever before, and with this many expiring contracts at once, it adds even more instability to the session.

Goldman also estimated that today’s expiration carries a notional exposure of more than $4.7 trillion. That’s nearly a fifth of the total daily market volume on a high-trade day.

Indexes fall as tariff fears and tech weakness pile on

The S&P 500 dropped 0.8% today. That puts the index on track to record its fifth straight weekly loss, something that hasn’t happened in more than two years. The Nasdaq Composite pulled back 0.7%, and the Dow Jones fell 264 points, or 0.6%.

This drop also brought the S&P 500 back into negative territory for the week, down 0.4% since Monday. At one point, the index dropped far enough to touch correction territory, which is defined as a 10% fall from its recent high. Right now, it’s sitting more than 8% off that record, still within reach of a deeper correction if selling keeps going.

There was a slight rally earlier in the week when the Federal Reserve confirmed it still expects two interest rate cuts in 2025. But the bounce didn’t last. Markets dropped again on Thursday and Friday, pulling the major indexes down with them.

Donald Trump’s upcoming tariff deadline on April 2 is also weighing heavily. Many companies have been warning about the economic impact of unclear trade policy. Michael Green, the chief strategist at Simplify Asset Management, said companies are holding back.

“Companies are increasingly citing confusion and uncertainty around their planning and capital spending and hiring decisions — and when they pause, it means that they’re slowing down,” Michael said. “There’s an element of that playing out in the markets.”

FedEx, Nike, and Tesla help drag stocks lower

FedEx led the losses Friday morning after cutting its earnings outlook. The company cited “weakness and uncertainty in the U.S. industrial economy.” Shares fell 8% in early trading. The company didn’t offer new guidance beyond that, but traders dumped the stock anyway.

Nike didn’t fare much better. Shares dropped about 5%, after executives warned that sales this quarter would miss expectations. Tariffs and low consumer confidence were blamed for the dip. The stock eventually fell more than 7% and hit a new 52-week low, pulling its market cap below $100 million.

The quarter got worse as it went on, and Don Bilson from Gordon Haskett said things don’t look better for next year. “The forecast wasn’t very pretty,” Don said. He added that new CEO Elliott Hill, who rejoined Nike five months ago after leaving in 2020, doesn’t expect a “meaningful bounce back” in fiscal 2026.

Tesla got hit too, which really is just the usual now. Adam Jonas, lead stock analyst at Morgan Stanley, dropped his price target for the stock from $430 to $410, even though that still implies a 73.5% gain from where the shares closed Thursday. Adam kept it as a top pick, but the numbers told a different story.

He cut his first-quarter delivery estimate down to 351,000 vehicles, which is over 9% lower than the same quarter last year. Adam’s earlier call had been for 415,000 deliveries, which would’ve been a 7% increase year over year. The drop puts more pressure on Tesla heading into the next earnings cycle.

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Doug is a Chartered Alternative Investment Analyst who spent more than 20 years as a derivatives market maker and asset manager before “reincarnating” as a financial media professional a decade ago.

Doug is a Chartered Alternative Investment Analyst who spent more than 20 years as a derivatives market maker and asset manager before “reincarnating” as a financial media professional a decade ago.

David Schepp is a veteran financial journalist with more than two decades of experience in financial news editing and reporting for print, digital, and multimedia publications.

Open full sized image A narrow path that could lead to big returns. © Drobot Dean/stock.adobe.com, © adragan/stock.adobe.com; Photo illustration Encyclopædia Britannica, Inc

Basis trading is a common strategy used by professional investors to profit from the small price difference between the cash (or “spot”) price of an asset such as a Treasury security or commodity and what it may be worth several months from now, as reflected in the price of a futures contract based on that asset. The gap between today’s cash price and the futures market price is known as the basis. Predictable movements in the basis create opportunities for relatively low-risk returns.

An asset’s cash and futures prices tend to converge as the futures contract nears expiration (assuming the market is functioning normally). When traders talk about “the basis trade,” they usually mean a strategy involving longer-term U.S. Treasury notes and bonds. Basis trades are especially popular among hedge fund managers and other institutional investors, who often use borrowed money (“margin”) to boost their returns.

Key Points Basis trades aim to capture small price gaps between bonds and futures, especially in the Treasury market.

To make such small returns worthwhile, investors often borrow heavily, which can amplify both gains and losses.

When many traders use leverage simultaneously, even minor market shifts can lead to forced selling and broader volatility.

But what happens when too many big investors use borrowed money to make these trades? The risks become amplified. That means even small changes in interest rates or bond prices can lead to substantial losses and prompt a wave of selling that ripples through the market. Basis trading appeals to traders looking for reliable returns—and raises red flags for market regulators seeking to maintain financial stability. Basis trade: The basics At its simplest, a basis trade takes advantage of the price gap between a bond in the cash market and a futures contract tied to that bond. “The basis” refers to that gap, and traders make a profit when it narrows over time. That may sound counterintuitive, but it’s because the potential for profit doesn’t come from the gap getting larger; it comes from how the two prices move closer together in a predictable way.

In plain terms: How basis trading works Basis trades may sound complex, but the idea behind them is pretty simple. You make money by buying something cheap today, locking in a higher sale price for later, and using borrowed money to do it—then keeping the difference after you pay back your loan.

To put the trade in motion, you buy a basket of bonds in the cash market and simultaneously sell (take a short position in) futures contracts in an amount equivalent to the basket’s notional value. (Each Treasury bond futures contract has a notional or “face” value of $100,000.) That transaction locks in the price difference. If the two prices move closer together as the futures contract nears its expiration date, you can unwind the trade—sell the bonds and buy back the futures—and realize a profit. The key to a successful basis trade isn’t predicting where bond prices or interest rates are headed. It’s understanding how the relationship between the bond and its futures contract is likely to change over time. When that relationship moves in a consistent, expected way, traders can profit, even if neither the bond nor the futures contract moves much on its own. The mechanics behind basis trades Basis trades involve buying a bond in the cash market and selling a futures contract tied to that same bond. The setup creates a spread (the basis) that traders expect to shrink over time. If the gap narrows as planned, they can unwind both sides of the trade and pocket the difference.

Why bond prices fall when interest rates rise Bond prices and interest rates move in opposite directions because a bond’s price reflects how its yield, or return, compares with what’s available in the market. When interest rates rise, newly issued bonds offer higher yields, making older bonds with lower yields less attractive to investors, a relationship often reflected in the shape of the yield curve. To stay competitive, the prices of those older bonds fall. When interest rates drop, the opposite happens: Older bonds with higher yields become more valuable, and their prices go up.

In a highly simplified example, say an investor buys a Treasury bond for $99.50 and sells a futures contract for $100. The 50-cent difference is the basis. Over the next few weeks, the futures price falls to $99.55, while the bond price holds steady. The investor closes both positions by selling the bond and buying back the futures contract at the new, lower price. The bond sale breaks even, and the futures position generates a 45-cent gain. (See figure 1.)

Open full sized image Figure 1: STEADY AS IT GOES. In a typical basis trade, the investor sells a futures contract and buys the corresponding bond, aiming to profit as the gap between the two prices narrows over time. Photo illustration Encyclopædia Britannica, Inc

In contrast, consider the same trade gone wrong: The investor buys the bond at $99.50 and sells a futures contract at $100. But instead of narrowing, the gap widens. The futures price rises to $100.25, while the bond price stays flat. To unwind the trade, the investor sells the bond near $99.50 and buys back the futures contract at the higher price of $100.25, locking in a 25-cent loss. (See figure 2.)

Open full sized image Figure 2: WHEN THINGS GET WONKY. Market stress can widen the gap between futures and bond prices, forcing leveraged traders to unwind positions at a loss and potentially triggering broader market disruption. Photo illustration Encyclopædia Britannica, Inc

The basis exists because futures prices reflect more than just the bond’s current, or spot, price. The basis also accounts for interest rates, the time until the futures contract expires, and the cost of borrowing money to hold the bond until then. These factors can push the futures price slightly higher or lower than the bond’s price in the cash market. Normally, the prices will converge as the expiration date for the futures contracts approaches. Although U.S. Treasurys are the most common focus, basis trading also occurs in other established markets, such as corporate bonds, commodities, and currencies, where cash and futures prices can temporarily diverge.

Basis trading in crypto markets Basis trading has also gained traction in the cryptocurrency market, where traders exploit price gaps between spot exchanges (like Coinbase or Binance) and crypto futures markets (such as CME Bitcoin futures). Some use perpetual futures, which are contracts that never expire and track the spot price through regular payments between buyers and sellers. Although the risks differ, the basic structure mirrors traditional basis trades.

Why hedge funds are drawn to basis trades The appeal to hedge fund managers lies in the gap’s relative stability. Even small, predictable differences between bond and futures prices can be profitable if the trade is large enough. That predictability allows firms to increase the size of their positions, often using borrowed money to amplify the potential return. But that same leverage also increases the risk. If the basis moves in the wrong direction, even slightly, the losses can add up quickly, especially when many investors use the same strategy at once. Where risk starts to build Basis trades may appear low risk, especially when price movements are small and the trade behaves predictably. But the use of leverage changes the equation. Borrowing lets you take larger positions (make bigger bets) than you could afford otherwise. If the price drops or your borrowing costs rise, you can lose money quickly, more than you would have if you’d used only your own cash.

When basis trades added to the chaos In April 2025, a sharp sell-off in U.S. Treasurys—alongside a spike in stock market volatility—followed President Donald Trump’s announcement of sweeping and unprecedented tariffs, which escalated trade tensions. As bond prices fell, hedge fund firms holding basis trades faced margin calls, meaning their lenders required them to quickly add more cash or sell assets because the value of their investments had dropped too much. That pressure forced them to unwind trades quickly, adding to the volatility and drawing renewed attention from regulators.

Because these trades are often funded through short-term borrowing, particularly in the repurchase (repo) market, any disruption in funding can force traders to unwind positions quickly, adding pressure to already strained markets. That dynamic has prompted comparisons to the carry trade, where investors borrow in low-interest areas of the world such as Japan and Switzerland, then invest in high-yielding, speculative areas of the market. The risk can broaden when many firms crowd into the same trade. A spike in volatility, drop in market liquidity, or other unexpected events may cause investors to rush to exit their positions at the same time. That wave of selling can push prices further out of line, forcing more unwinding and amplifying the market reaction. Why regulators pay close attention Because basis trades can amplify market stress if many traders rush to exit at once, regulators worry that widespread use of the strategy could trigger broader financial instability. The concern isn’t just that some firms might lose money. If lots of investors try to unwind their trades at the same time, it could disrupt the short-term markets where banks and investors borrow from each other (called funding markets), cause big swings in bond prices, or spread instability to other parts of the financial system.

The Wall Street has had a good week of recovery. However, the indices have been struggling to sustain highs. While the Dow Jones closed 300 points higher on Wednesday, it corrected nearly 300 points from the highs. This was also seen on Thursday’s trading session, however, the Dow Jones ended below the flat line.

The indices will be put to test on Friday, when the investors and indices will grapple with the quarterly “triple witching” phenomenon.

Triple Witching is an event that takes place on the third Friday of March, June, September and December. For those not aware of this phenomenon, Triple Witching, or the simultaneous expiration of stock options, index futures, and index options, occurs four times a year. The first triple witching of 2025 will take place this Friday.

This phenomenon was earlier called as ‘Quadruple Witching’, with single-stock options also expiring on the same day. However, the single-stock options have not traded since 2020 and hence they have been renamed Triple Witching.

This will take effect during the final hour of trading session when the contracts expire. One can expect unusual price movement as traders will be looking to adjust or close their positions in a stock or index option. This makes it natural for the stocks with lower market capitalisation and heavy derivatives volumes to see higher movements during this event.

Gold breaks below $3,050 and even briefly breached $3,030 in the European trading session on Friday.

Traders remain cautious with geopolitical turmoil and trade war fears still present.

Gold expected to remain supported above $3,000 and keep a new all-time high in reach.

Gold’s price (XAU/USD) faces a second day of losses while the weekly performance is still positive. The precious metal trades around $3,030 at the time of writing on Friday after reaching a fresh all-time high at $3,057 the previous day. This downside move should not come as a surprise with Quadruple Witching taking place. Quadruple Witching is an event in financial markets when four different sets of futures and options expire on the same day, and investors need to decide whether to sell and buy back their positions or just sell them.

Meanwhile, on the geopolitical front, tensions remain in Gaza and Turkey. Later during the day, markets will brace for comments on tariffs from United States (US) President Donald Trump, as announced reciprocal tariffs will come into effect on April 2 and might shake up markets.

Daily digest market movers: Trump calls on mining

US President Donald Trump is invoking emergency powers to boost the ability of the US to produce critical minerals, as part of a broad effort to ramp up the development of domestic natural resources and make the country less reliant on foreign imports, Bloomberg reports.

Gold has climbed 16% this year in a rally that has produced 15 all-time highs in 2025, extending last year’s strong gains as investors seek safety. Geopolitical conflicts in the Middle East and Ukraine have bolstered the precious metal’s appeal. Several major banks have raised their price targets for bullion in recent weeks, with Macquarie Group forecasting it could rise as high as $3,500 an ounce, Bloomberg reports.

An example of how not only traders enjoy the Gold’s rally comes with numbers from the Ontario Teachers’ Pension Plan. The pension fund gained 9.4% last year, driven by strong returns in stocks, venture growth and commodities. The performance boosted the fund’s net assets to $185.2 billion at the end of 2024, according to a statement Thursday, Bloomberg reports.

Indonesian mining Stocks tumbled on Friday after the government signaled it was pushing forward with plans to hike royalties paid by producers in a bid to bolster public finances, Reuters reports. The local industry index for miners, including PT Vale Indonesia and PT Merdeka Copper Gold, fell as much as 3.2%, the biggest slide since the plan was first proposed at the start of last week.

Technical Analysis: Some breathing

The quadruple witching this Friday offers traders and funds a window of opportunity to take some profit from the precious metal. Big volumes will be traded, which means market participants are less exposed and it is not likely that expiring contracts will result in sales. At the end of this Friday, the question remains about how many contract holders in Bullion will have rolled over their contracts at current elevated prices.

Regarding technical levels, the intraday Pivot Point at $3,042 is the first resistance to recover, followed by the new all-time high at $3,057 reached on Thursday. The next target is the R1 resistance at $3,059, just below the $3,060 round number. If the last one is broken, then R2 resistance comes in at $3,074.

On the downside, the S1 support at $3,027 is doing its job for now during the European trading session, seeing some buyers coming in just below that level. In case more selling pressure should occur, look for the S2 support at $3,011 and the $3,000 round number to try and avoid a sharp correction.

XAU/USD: Daily Chart