Welcome to the world of Zero Days-to-Expiration Options

A Simple and Accessible Trading Strategy

Are you interested in a sophisticated trading strategy that’s becoming more accessible to retail investors? Look no further!

Introducing Zero Days-to-Expiration Options — a one-day bet on the direction of the markets.

CBOE Global Markets CEO Ed Tilly is right in the middle of it. His company offers these options all five weekdays.

“It’s really become attractive and garnered a lot of interest in being able to express that opinion [on the market] in the short term,” Tilley told AsumeTech’s “ETF Edge” earlier this week.

Zero days-to-expiration options are contracts that expire the same day they’re traded. Tilly believes these options are appealing to investors by allowing them to invest at the shortest duration of time in a contract.

“At the end of the trading day, the next result of that trade is settled in cash — not physically delivered like a stock or an ETF,” he said.

Most Effective as a Tool for Pros?

Simplify Asset Management also offers these zero day-to-expiration options. Michael Green, the firm’s chief strategist and portfolio manager, notes that they’ve become particularly attractive to individuals.

“About a third of [our] trades are coming from retail, and about two-thirds are coming from institutional,” he said.

Despite the growing retail interest, Green emphasizes that zero days-to-expiration options may be most effective as a tool for professionals.

“We use the phrase sophisticated retail investors, and I think there’s actually a really important distinction there,” Green said. “In general, those who are buying options on a consistent basis are doing more speculation than they actually are being sophisticated in terms of a return profile. It tends to be a losing bet.”

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