The Last Three Witching Days of the Year: $7 Trillion in Derivatives Expiring Trigger Multiple Market Risks

December 19th, the final major market event of the year is about to unfold—Triple Witching Day officially arrives. Stock index futures, stock index options, and single-stock options will all expire simultaneously. According to Goldman Sachs data, over $7.1 trillion in notional value contracts will face expiration and settlement on this day, setting a record high, with approximately $5 trillion linked to the S&P 500 index.

Trading volume will hit new highs, strike prices become key support levels

Jeff Kilburg, founder of KKM Financial, predicts that trading volume on this day will far exceed normal levels, as options traders are conducting annual position liquidations and profit/loss settlements. As of press time, the S&P 500 index stands at 6,774.75 points, up 15% since early 2025.

“6800 points is an important psychological threshold for the S&P index,” Kilburg notes. “A large number of position adjustments have likely been dispersed, and the key is whether the bulls can hold the line after pushing higher.” Market traders are closely monitoring this strategic level, as a breakout or breakdown could trigger a chain reaction.

Bitcoin faces cross-asset risk transmission

The cryptocurrency market will not be unaffected. Tim Sun, senior researcher at HashKey Group, points out that Bitcoin’s correlation with the Nasdaq index is significant, and recent institutional inflows have increased participation. When large-scale derivatives expire and trigger position adjustments, institutions often manage cross-asset liquidity—meaning that sharp volatility in the US stock market can easily impact the crypto ecosystem.

Derek Lim, head of research at crypto market maker Caladan, adds, “The transmission mechanisms are mostly indirect, mainly through the stock market performance affecting market risk appetite, which in turn impacts high-beta assets—including Bitcoin.”

Bank of Japan tightening signals intensify capital outflows

Adding to this, the Bank of Japan raised interest rates by 25 basis points to 0.75% today—its highest level in thirty years—creating multiple uncertainties in the market. “Market vigilance regarding the Bank of Japan’s potential tightening path has increased, which could trigger large-scale unwinding of arbitrage trades and lead to capital withdrawals from risk assets like Bitcoin,” Sun warns.

Considering the three factors of triple witching options settlement, stock market volatility, and central bank policy, market participants need to prepare for cross-asset liquidity shocks.