Zero-day options may soon come to individual stocks like Tesla and Nvidia, but with risks involved.
- Zero-day-to-expiry (#0dte) options have gained popularity among investors due to their potential for high returns.
- The #0dte boom has been limited to index options so far, but there are plans to expand it to single-stock options.
- Options on individual stocks like Tesla and Nvidia could see daily expirations in the future.
- Brokers and exchanges have discussed the pros and cons of this move in closed-door meetings.
The zero-day-to-expiry (#0dte) options market has seen a surge in popularity due to its potential for high returns. Currently, these options are limited to indexes such as the S&P 500 and Nasdaq-100. However, there are plans to expand them to individual stocks like Tesla and Nvidia. Options on single stocks currently expire weekly, but daily expirations could bring new risks for investors, particularly when companies report earnings after 4 p.m. ET. Brokers and exchanges have discussed the pros and cons of this move in closed-door meetings. The earliest that #0dte might come to options on individual stocks is late 2025, with a possible limited launch covering only a few stocks initially. Single-stock options are settled with purchases or sales of shares, creating potential pitfalls for investors.
Factuality Level: 8
Factuality Justification: The article provides accurate and objective information about zero-day-to-expiry (#0dte) options, discussing their current state in the market, potential risks, and opinions from various industry players on bringing this model to single-stock options. It also explains how index options work compared to single-stock options and the challenges that may arise if #0dte is implemented for individual stocks. The article presents different perspectives without promoting any personal opinion as a universally accepted truth.
Noise Level: 5
Noise Justification: The article provides some relevant information about zero-day-to-expiry (#0dte) options and their potential impact on the stock market, but it also includes speculative statements and anecdotal evidence. It lacks a comprehensive analysis of the long-term trends or consequences of this phenomenon. Additionally, it does not offer much in terms of actionable insights or new knowledge for readers.
Public Companies: Tesla (TSLA), Nvidia (NVDA), Charles Schwab (SCHW), Citadel Securities (), Robinhood Markets (HOOD), Morgan Stanley (MS), Cboe Global Markets (CBOE), Nasdaq ()
Private Companies: Tastytrade,Susquehanna International Group
Key People: Michael McCaskill (Day Trader and Volleyball-Programs Coordinator)
Financial Relevance: Yes
Financial Markets Impacted: Options market and individual stock prices
Financial Rating Justification: The article discusses the potential expansion of zero-day-to-expiry (#0dte) options to single-stock options, which could impact the options market and individual stock prices. This development has implications for investors and financial markets as it may bring new risks and opportunities. It also mentions discussions among brokers, exchanges, and electronic-trading firms on the pros and cons of implementing daily expirations on single-stock options.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: The article discusses trends and developments in the options market but does not report on any extreme event that occurred in the last 48 hours.·
Move Size: No market move size mentioned.
Sector: Technology
Direction: Up
Magnitude: Large
Affected Instruments: Stocks
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