Zero

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<p class="has-drop-cap">The Nasdaq exchange group <a aria-label="listed new zero-options contracts (opens in a new tab)" href="https://www.ft.com/content/a0d3b763-44c1-497b-b1e4-70d0b8def87d" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">listed new zero-options contracts</a> that allow traders to speculate on Treasury and commodity market prices. By adding new options contracts tracking popular exchange-traded funds (ETFs) tracking oil, natural gas, gold, and long-term Treasuries, Nasdaq aims to replicate the growing trend that <a href="https://tokenist.com/what-the-surge-in-demand-for-zero-day-options-means-for-the-stock-market/" rel="dofollow" class="deco-link">transformed trading in US stock indices</a> in recent years.&nbsp;</p> 
<h3 id="nasdaq-adds-new-contracts-to-take-advantage-of-zero-day-options-surge">Nasdaq Adds New Contracts to Take Advantage of Zero-Day Options Surge</h3> 
<p>This year saw the emergence of a rising trend in <a href="https://tokenist.com/investing/what-is-options-trading/" rel="dofollow" class="deco-link">options trading</a> on Wall Street, namely zero-day options.&nbsp;</p> 
<p>To capitalize on their growing popularity, Nasdaq has introduced novel options contracts linked to popular ETFs that focus on commodities such as oil, natural gas, gold, silver, and long-term Treasuries.</p> 
<p>The move aims to replicate a boom that disrupted trading in US stock indexes during the coronavirus pandemic. This August, zero-day options represented over 50% of the overall S&amp;P 500 options volume, up from just 5% in 2016, according to the Cboe exchange group.&nbsp;</p> 
<p>At first, zero-day trading in options tied to the S&amp;P 500 was considered by investors as a transient phenomenon driven by speculative retail traders, <a href="https://www.cnbc.com/2023/07/22/too-risky-retail-bets-on-zero-day-options-are-growing.html" target="_blank" aria-label="raising concerns (opens in a new tab)" rel="noreferrer noopener nofollow" class="deco-link">raising concerns</a> among analysts and regulators over a potential systematic risk. However, Nasdaq’s move suggests that the exchange group perceives zero-day trading as a potential longer-term trend that could spill into different asset classes.&nbsp;</p> 
<p>Options are contracts that allow investors to purchase or sell an asset at a specific price by a given date. Trading these contracts on the expiry date is referred to as zero-day trading. Speculative traders often use it to bet on or hedge against extremely short-term market movements.&nbsp;</p> 
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<h3 id="why-is-zero-day-options-trading-risky">Why is Zero Day Options Trading Risky?</h3> 
<p>Although zero-day options are becoming a thing among retail traders, analysts still see them as an extremely risky strategy.</p> 
<p>This is primarily due to its short-term nature and <a href="https://tokenist.com/vix-at-7-month-high-as-2-5-trillion-in-options-set-to-expire-friday/" rel="dofollow" class="deco-link">high volatility</a>. While regular stock options inherently have a high-risk profile, these threats are even more heightened when trading zero-day options due to their abbreviated lifetime.&nbsp;</p> 
<p>Notably, these options expire within a day, making them highly sensitive to sudden market fluctuations. The limited time frame amplifies the risk, as the market has little room to correct if the trade goes against the investor.&nbsp;</p> 
<p>Additionally, the speculative and leveraged nature of zero-day options magnifies potential losses. Retail investors, often attracted by the low entry cost, may underestimate the complexity and risk, leading to significant financial exposure and a higher chance of large-scale losses.</p> <iframe src="https://tokenist.substack.com/embed" width="100%" height="320" style="border:1px solid #EEE; background:white;" frameborder="0" scrolling="no"></iframe> 
<p><strong><em>Given their high-risk profile, do you think US market regulators will likely impose certain controls to regulate the trading of zero-day options in the future? Let us know in the comments below.&nbsp;</em></strong></p> 
<p>The post <a rel="nofollow" href="https://tokenist.com/nasdaq-lists-zero-day-options-as-demand-skyrockets/">Nasdaq Lists Zero Day Options as Demand Skyrockets</a> appeared first on <a rel="nofollow" href="https://tokenist.com">Tokenist</a>.</p>

Nasdaq Lists Zero Day Options as Demand Skyrockets

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