Just as Wall Street traders come to grips with the Federal Reserve’s interest-rate cut, Friday’s US options expiration threatens to whipsaw the market some more.
The quarterly “triple-witching” will see some $5.1 trillion worth of options tied to individual stocks, indexes and exchange-traded funds fall off the board, according to an estimate from derivatives analytical firm Asym 500. While the risk is sometimes overblown by Wall Street players, the options event has a reputation for causing sudden price moves as contracts disappear and traders roll over their existing positions or start new ones.