Certain trading events happen every quarter. As traders, it is our job to understand what these events are, how they impact the market, and how we as traders (especially shorter-term traders) need to change our game plan, mindset, and execution based on these events.
To find these major events in the market and when they happen, here is the 2022 Nasdaq Trading Calendar.
One major event is Options Expiration (OPEX). During OPEX weeks, option-open interest reduces as near-term options approach expiration and then expire. OPEX is one week before options are set to expire, the Friday before every third Saturday each month. OPEX weeks are usually extremely volatile. Expect options premium to get crushed, so choose strikes wisely.
Our next major event is SPX Roll. Find the dates of this event on the CME Group website. SPX Roll occurs every quarter. Big money has to roll out to further expiration because the options futures contracts and the context they are playing are set to expire. This creates large pops and drops in price action in the market.
Another event is Quad Witching, which happens on the third Friday of March, June, September, and December. Quad Witching is when market index futures, market index options, and stock options expire once every quarter. Quad Witching can create false signals, traps, and premium crushing on options. In turn, this leads the market to liquidity.
The last event we will cover is Rebalancing. This is when large funds readjust their portfolio to match their risk tolerance and stick to their investment plans. Rebalancing includes the buying and selling of portfolio assets to help balance risk. This creates large pops and drops in the market, leading to more trade opportunities.
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