(01-03-2023, 09:32 AM)Behappyalways Wrote: A Day In The Life Of A 0DTE Option
https://www.zerohedge.com/markets/day-life-0dte-option
Didn't really know what 0TDE meant until I read this. 40% is a big deal and it starts to dent the significance of VIX (which I like to use as a fear indicator for buying)
Stock-option traders are creating explosive volatility in the market. Here’s what that means for your portfolio.
Over the past year, trading in so-called “zero day to expiration” — or “0DTE” — contracts linked to the S&P 500 has surged, according to data from the Cboe Options Exchange, where many of these contracts are traded. They now account for more than 40% of total trading volume in S&P 500 options, according to data furnished by the exchange.
Another consequence of the surge in trading of 0DTEs is that Wall Street’s preferred gauge of implied volatility, the Cboe Volatility Index VIX, +9.69%, or Vix, has remained conspicuously subdued, causing some to underestimate just how rocky markets might become.
This is possible because of the way the VIX is designed, since it doesn’t incorporate trading in short-dated option contracts like 0DTEs. Because of this, some experts have blamed the increasing popularity of short-term option trading for “suppressing” volatility.
https://www.marketwatch.com/story/every-...s-8656fa69