Stock Traders Endure a $3.5 Trillion Triple Witching Event

(Bloomberg) — Wall Street traders are enduring fresh equity-market fireworks Friday after another week of global turbulence.

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Stock transactions spiked at the open as the expiry of stock and index options collided with that of index futures in a quarterly event known as triple witching. In the first 15 minutes of trading as the benchmark slipped 0.2%, volume on S&P 500 Index was more than double the average for that time of day over the past 30 sessions.

Roughly $3.5 trillion of single-stock and index-level options were estimated to expire Friday, according to Goldman Sachs Group Inc. At the same time, more near-the-money options were expected to mature than at any time since 2019.

And once again, this triple witching is coinciding with a rebalancing of benchmark indexes including the S&P 500 — a combination that tends to spark single-day volumes that rank among the highest of the year. According to an estimate from Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, the rebalance in the index alone could spur $33 billion of stock trades.

Friday’s session landed just as the S&P 500 regained its footing with a three-day jump, buoyed by the Federal Reserve’s optimism the economy can withstand rate hikes and China’s promise to bolster its financial markets. But in the telling of derivatives pros, the recent rally was fueled by dealers covering short positions to balance exposures while demand for stock hedges was elevated.

Now as many…