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Wall Street examines risks around short-dated options as warnings rise 

Business & Finance

Reuters reported exclusively that a recent explosion in trading in a type of equity derivative security has prompted Wall Street players and a major clearing house to examine potential risks. The so-called zero day to expiry options (0DTE), which refers to contracts that expire in less than 24 hours, offer retail and institutional traders a relatively cheap, though high-risk, way to bet on intra-day swings in stock prices. 

Market Impact

Many 0DTE options have a low probability of rising in value as they approach expiration. However, small changes in the price of the underlying stock or index can cause their prices to also change. A large intraday market move could cause contracts to suddenly rise in value and expose their sellers to increased risk of big losses.

Article Tags

Topics of Interest: Business & Finance

Type: Reuters Best

Sectors: Business & Finance

Regions: Americas

Countries: United States

Win Types: Exclusivity

Story Types: Exclusive / Scoop

Media Types: Text

Customer Impact: Significant National Story


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