What Are Zero-Day Options?
Zero-day options are options that expire the same day they are purchased, meaning the entire time-value decay happens within hours.
Quelle: Bloomberg — Popular Zero-Day Options Strategies Keep a Lid on Stock Rallies
Why Are They So Popular?
1.Intraday Opportunities
Traders use small market movements for short-term gains. A single trading day can be enough to achieve significant returns.
2.Lower Premiums
Lower premiums than longer-dated options make 0DTE options attractive even for traders with smaller capital.
3.High Flexibility
Ideal for news events, FOMC meetings, earnings releases, and other short-term market movements.
How Do They Affect the Market?
According to market analysts, 0DTE strategies can limit market rallies because many traders simultaneously open hedges or short positions via options. This creates additional selling pressure in the market.
Important to understand: The massive increase in 0DTE trading volume has a measurable impact on market microstructure and can lead to increased volatility in the final trading hours.
What Does This Mean for German Traders?
Although the trend is more pronounced in the US, 0DTE products are increasingly becoming available on European platforms.
Important for German investors:
- High Volatility: means quick gains but also high risks
- Risk Management: is especially important with 0DTE strategies
- Time Management: Active monitoring during the trading day required
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Important Risks with 0DTE Options
- ▸Extreme Time Decay: The entire Theta decay happens within hours
- ▸High Total Loss Risk: Small misjudgments can lead to total loss
- ▸Liquidity Risk: Not all strikes have sufficient liquidity
- ▸For Experienced Only: 0DTE trading requires solid knowledge and experience