Nasdaq Launches New ETFs for Short-Term Options Trading
By Pierre Herubel
In a move that could significantly impact the options market, the Nasdaq recently introduced five zero-day options-based exchange-traded funds (ETFs). These ETFs will allow investors to trade commodities and a Treasury using a popular short-term options strategy.
The ETFs include the United States Oil Fund (USO), United States Natural Gas Fund (UNG), SPDR Gold Shares (GLD), iShares Silver Trust (SLV), and iShares 20+ year Treasury Bond ETF (TLT).
“Zero-day to expiration” or “0DTE” refers to a trade which expires in less than a day. This type of trading has seen a surge in popularity, with the volume of S&P 500 zero-day contracts increasing at least 40%. However, not everyone is excited about the new ETF offerings due to the complexity of the trade.
Dave Nadig, VettaFi’s financial futurist, expressed caution about the new products, citing concerns about undereducated retail investors who may not fully understand the risks associated with trading options.
The surge in activity surrounding zero-day options has also raised concerns among analysts about its potential negative impact on the market. Nadig, however, believes that most of the contracts are coming from hedge funds, not retail investors.
In conclusion, while zero-day options trading presents new opportunities for investors, it also comes with inherent risks and complexities that may not be suitable for all individuals. As such, careful consideration and a deep understanding of the market are essential for anyone considering this type of trading.