Triple Witching and Index Rebalancing Events
This week’s volatility could be exacerbated by the phenomenon of triple witching, where stock options, stock-index futures, and stock-index options contracts all expire simultaneously. This event, coupled with the quarterly rebalancing of major indexes, typically increases trading activity and market volatility. The upcoming rebalancing will see significant adjustments in the S&P Technology Select Sector Index, with notable changes in the weightings of giants like Microsoft, Nvidia, and Apple. Such shifts necessitate substantial buying and selling of these stocks by funds tracking the index, likely leading to heightened volatility.
Effects of Passive Investing on Market Concentration
Passive investing trends have contributed to market concentration in a few mega-cap stocks, further amplifying volatility risks. Research indicates that the rise in passive fund investments…
