TLT - Zero-day options rush: Nasdaq adds contracts tracking commodity Treasury ETFs

2023-11-27 05:30:02 ET

This year's trending options trade on Wall Street - zero-day options - has now reached the Treasury and commodity markets, with Nasdaq ( NASDAQ: NDAQ ) listing new options contracts tracking popular ETFs investing in oil, natural gas, gold, silver, and long-term Treasuries.

Options contracts that expire on Wednesdays were added on five funds: 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 ). These additions will start trading on Tuesday.

The zero-days-to-expiration options, or 0DTEs, strategy involves trading an options contract on the day it expires. Traders use this strategy to make a quick buck and hedge against short-term market moves caused by major events such as CPI reports and the Federal Reserve's policy meetings.

Cboe Global Markets ( CBOE ) has listed the Wednesday expiries , with more U.S. exchanges expected to follow. To note, Defiance has two 0DTE-based ETFs - Defiance Nasdaq 100 Enhanced Options Income ETF ( QQQY ) and Defiance S&P 500 Enhanced Options Income ETF ( JEPY ).

Zero-day options trade gained popularity among retail traders during the pandemic. But analysts, including JPMorgan, have warned that market volatility could greatly intensify if these options reach a big enough scale.

More on zero-day options

• How Are Zero Days To Expiration Options Changing Markets?
• Weekly Commentary: Back To Squeezeville
• Zero-Day Options: Zero Thought

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