On Wednesday, the offer to sign up for one of Nasdaq’s new two-week contracts expired. The rapid expansion in short-dated options that has become a popular trend with both retail traders and hedge funds is now growing beyond common forex stocks and into other classes of assets.
Zero-day bets boom as short-dated options grow
Nasdaq’s new contractual options are based on the exchange-traded products of the United States Oil Fund, SPDR Gold Shares, iShares 20+ year Treasure Bond ETF (TLT), United States Natural Gas Fund and iShares Silver Trust.
The short-term options market is well built for stock index products, and, while it has historically been the case that Friday is the day on which options contracts expire, contracts can now expire on any day with the most popular stock indexes, hence Wednesday falling as Nasdaq’s chosen day, rather than a traditional Friday.
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This has allowed for the creation of 0DTE (Zero Day to Expiration) options trading, and new listings equal new asset classes which receive the same exposure with less cost when compared to larger retail and commodities stocks.
In a rule change proposal in June 2023, Nasdaq announced that the Exchange was of the belief that alternative expirations portrayed an accurate investor sentiment because of the significant percentage of volume within Invesco QQQ Trust, IWM and Wednesday SPY expirations. The 0DTE contracts were approved in early November by the US Securities and Exchange Commission.
