MW Investors are in for a wild week - and the Fed meeting is just the beginning

By Joseph Adinolfi

September's 'triple witching' options expiration is set for Friday. It is one of a host of derivatives-market developments that investors should probably keep an eye on.

Friday's "triple witching" options expiration could be a major event for investors (and not just in Eastwick).

Investors are laser-focused right now on what promises to be the wildest Federal Reserve meeting in years. But this isn't the only potentially market-moving event on the calendar this week.

Hours before Fed Chair Jerome Powell steps up to the lectern at the Marriner S. Eccles Building on Wednesday, volatility traders will be preoccupied with the expiration of options and futures linked to the Cboe Volatility Index VIX, better known as the VIX, or Wall Street's "fear gauge." They are due to expire ahead of the opening bell on Wednesday in the latest monthly "Vix-piration" event.

Then, on Friday, comes the latest "triple witching," when equity-linked options and futures contracts expire on the same day. Options contracts tied to indexes like the S&P 500 SPX, along with popular ETFs and individual stocks, will either be exercised, or expire worthless.

Triple-witching events have in the past been associated with major turning points in markets, according to Brent Kochuba, founder of SpotGamma, a provider of options-market data and analytics.

Data from SpotGamma shared with MarketWatch showed that options tied to about $6.3 trillion in stocks and equity indexes are due to expire. That should place the September expiration among the three largest triple-witching events ever recorded, Kochuba told MarketWatch.

The timing of Friday's triple witching, coming so soon after Wednesday's Fed meeting, could help to magnify any volatility that results from the Fed meeting, especially if Powell leaves investors feeling disappointed. Futures markets are pricing in three interest-rate cuts from the central bank before the end of the year, and a cut on Wednesday is seen as a virtual guarantee, according to CME Group data.

"When there is a large expiration, it tends to free up the market to move a little bit more naturally," said Matt and Mike Thompson, co-portfolio managers at Little Harbor Advisors, during an interview with MarketWatch.

Another major options-expiration event looms later this month, when the so-called "JPMorgan collar" rolls off. The "JPM collar" is most closely associated with the JPMorgan Hedged Equity Fund JHEQX, a mutual fund with more than $20 billion in assets, according to FactSet data. The strike for the S&P 500 quarterly call option contracts that the fund sold as part of its collar strategy sits at 6,505. That could provide meaningful support for stocks if some weakness does follow the Fed meeting, Kochuba said. A collar strategy involves selling call options to offset the cost of buying puts, which offer some downside protection.

Recent rumblings in the options market suggest that the market could be setting up for a big move in either direction, Kochuba said. But ultimately, whatever happens will probably depend on the Fed.

Kochuba pointed out that implied volatility tied to both short-dated zero day-to-expiration contracts and longer-dated contracts has started to tick higher this week. The VIX finished at 16.29 on Tuesday, according to FactSet data. This comes as daily trading volume in so-called zero-day options has been running at or near records over the past few weeks.

The Thompsons also pointed out that implied volatility in the Treasury market, represented by the ICE BofAML MOVE Index, recently touched its lowest level in about four years.

"We're at all-time highs, it's been quite a while since we've had a 2% move down, but call prices aren't all that rich," Kochuba told MarketWatch. "I think this could be a short-term signal that volatility is due to jump."

U.S. stocks finished modestly lower on Tuesday, with the Nasdaq Composite COMP snapping a six-day winning streak, according to Dow Jones Market Data. The S&P 500 and Dow Jones Industrial Average DJIA also declined.

-Joseph Adinolfi

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September 16, 2025 17:01 ET (21:01 GMT)

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