The Triple Witch Watch

Triple witching refers to the simultaneous expiration of three types of derivatives—stock options, stock index futures, and stock index options—on the third Friday of March, June, September, and December.

Today, March 21, 2025, is one of those days and this convergence tends to spike trading volume and volatility. For example, the October 16, 1987 triple witching preceded Black Monday’s 22.6% Dow crash.

Some people trade the triple witching days by buying the dip or buying straddles. History tells us that the S&P 500 has averaged a -0.53% return during triple witching weeks since 2017, compared to +0.37% in non-expiration weeks.

Two big stocks that are up today are Tesla and Palantir (PLTR) which are heavy in derivatives. I wouldn’t buy PLTR at these prices. It has a PE of 470 and is mostly a government contractor at a time when such industries are under attack.

Tesla (TSLA) is the better bet, though it has a PE of 120 and is losing money. The stock has been cut in half since mid-December and now trades at $244 a share down from $488.

At the Tesla all-hands meeting today, Elon Must told employees not to fret and to hang onto to thier stocks. Robotaxis and Optimus robots were on the way to save the day.

According to MSN:

“Tesla’s autonomous software used for its vehicles’ so-called Full Self-Driving feature, robotaxis, and Optimus bots would bring the company’s value to new heights. “It’s so profound and there’s no comparison with anything in the past,” Musk said. He says they can make about 5,000 Optimus robots this year. “I think we will literally build a legion, at least one legion of robots this year and then probably 10 legions next year,” Musk said.

On the Cybercab, Musk said a “revolutionary manufacturing process” is in the works that can build a robotaxi in “less than five seconds” like “a high-speed consumer electronics line.”

Musk added that Tesla would make a huge casting machine that would spit out cybercabs. He went on to say that the Cybercab would cost $30,000 and debut in 2026.

I’m bullish on robotaxis. ARK research has said that robotaxis will be a $50 billion business and that Tesla will own half the market. TSLA’s stock is expensive if you think of it as a car company. But no one ever went broke betting on Elon Musk long term.

All the best,

Christian DeHaemer

Outsider Club

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Jumat, 21 Maret 2025

The Triple Witch Watch

The Triple Witch Watch

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