ODTE options .... pros/cons?

Adam777 said:
If you look at the list current SPX option chains, today's 1DTE options will become tomorrow's 0DTE options. 0DTE is just the expiry day of the option, and therefore called "Zero Days to Expiration"
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Yah, I looked everywhere and cannot find a ticker for a specific CBOE 0DTE option. I really do not like how all these analysts and writers talk about them as if they are some new separate product, like a CME event contract.

So in essence, the ability to trade a CBOE weekly option on the last day of it's life is what they call a 0DTE option. Apparently no, you are just trading a weekly with no days left. That is not the same thing as a separate 0DTE, and the writers are being disingenuous in their reporting.

But here is a question...Since weeklies have been around forever, why is it only since the pandemic that this new strategy of entering a weekly (or monthly) on last day has gained so much traction? And why do these writers refer to them as "dailys", like the the guy in the article I posted? (He's not the only one who has called them that as if it is a separate entity...It is all over the place.)
 
Oh, for f**k sake....the level of mis-understanding is reaching diabolical levels. Normally, I would never awaken the sleeping dragon, but in this case..... @destriero , can you pls join this thread and dispense some of your abuse, condescension, and aggression on these poor souls. Put them in their place and out of their misery.
 
Overnight said:
Yah, I looked everywhere and cannot find a ticker for a specific CBOE 0DTE option. I really do not like how all these analysts and writers talk about them as if they are some new separate product, like a CME event contract.

So in essence, the ability to trade a CBOE weekly option on the last day of it's life is what they call a 0DTE option. Apparently no, you are just trading a weekly with no days left. That is not the same thing as a separate 0DTE, and the writers are being disingenuous in their reporting.

But here is a question...Since weeklies have been around forever, why is it only since the pandemic that this new strategy of entering a weekly (or monthly) on last day has gained so much traction? And why do these writers refer to them as "dailys", like the the guy in the article I posted? (He's not the only one who has called them that as if it is a separate entity...It is all over the place.)
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Trading them has always been a thing. Here's a random article from 1999 on trading 0dte options:
https://www.thestreet.com/investing...-friday-a-good-day-to-shop-for-options-736810
 
ffs1001 said:
Oh, for f**k sake....the level of mis-understanding is reaching diabolical levels. Normally, I would never awaken the sleeping dragon, but in this case..... @destriero , can you pls join this thread and dispense some of your abuse, condescension, and aggression on these poor souls. Put them in their place and out of their misery.
More...
+1 best post in thread
 
Overnight said:
Yah, I looked everywhere and cannot find a ticker for a specific CBOE 0DTE option. I really do not like how all these analysts and writers talk about them as if they are some new separate product, like a CME event contract.

So in essence, the ability to trade a CBOE weekly option on the last day of it's life is what they call a 0DTE option. Apparently no, you are just trading a weekly with no days left. That is not the same thing as a separate 0DTE, and the writers are being disingenuous in their reporting.

But here is a question...Since weeklies have been around forever, why is it only since the pandemic that this new strategy of entering a weekly (or monthly) on last day has gained so much traction? And why do these writers refer to them as "dailys", like the the guy in the article I posted? (He's not the only one who has called them that as if it is a separate entity...It is all over the place.)
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@Overnight, it doesn't matter what kind of options they were issued originally whether they were yearlies, monthlies or quarterlies or weeklies or whatever or for how for long the options have been outstanding. As long as they are on the very last day of their expiration, they are referred to as "0 DTE (Days to Expiration)" options. Trading 0DTE options is referring to the trading of options that are expiring on their expiration date because options can be traded up until the very last second of its expiration time on its expiration date so this is what people are doing believing there is excess profit to be made. For example, take an option that is expiring tomorrow, if somebody is trading tomorrow on this option that's expiring tomorrow, then he/she will be referred to as trading a 0DTE option because that option has 0 days to expiration as it's expiring on that very day.

Personally I don't see how excess profit can be made. These options are way too volatile to short but not having enough volatility to long but oh well, as long as one can make a buck.
 
Overnight said:
But here is a question...Since weeklies have been around forever, why is it only since the pandemic that this new strategy of entering a weekly (or monthly) on last day has gained so much traction? And why do these writers refer to them as "dailys", like the the guy in the article I posted? (He's not the only one who has called them that as if it is a separate entity...It is all over the place.)
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I think it's because more retail traders like us are trading and among retail traders, there is this really popular strategy called credit spread which I assume you are familiar with. If you do a casual search on the internet, credit spread or income earning is all you see. LOL In order to be profitable, you want the least amount of movement possible from the underlying so you want to short the option as close to the option's expiration as possible. Since the market has become more volatile since the pandemic, so people want to short the option with an even shorter time to expiration. And since the retail traders are trading 0DTE, the MM's who take the other side of the retail transactions have to hedge and thus this surge in 0DTE option trading.

That's my take. Everything is about retail traders nowadays. We rule the trading world now. :)
 
Scataphagos said:
If you long them, what's the worst that could happen... you lose your premium. What's the best that can happen... making a "few hundred percent"?

Seems 0DTE option plays won't go away until the premiums get big enough to discourage such speculation.

Brokers must love these things. Premiums are cheap so players buy lots of them.
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They are not really cheap. The premiums on the 0DTE options are adjusted to reflect the max. potential profit you can make. For example, an ATM option on 0DTE options might be selling at a cheaper premium than a 1DTE option but that's because the IV on the 0DTE option has also decreased and with theta (time decay) increased to reflect the less possibility of a large movement that will justify the premium. Imo, the premium of 0DTE is actually higher if you actually take into account how much of a chance there is for you to make a profit in excess of the premium you paid.
 
TheDawn said:
There are options with daily expirations, just not in ETF's or stocks. CBOE has issued index options with daily expirations. https://www.cboe.com/available_weeklys/
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Maybe it's just a semantic thing, but these are weeklies, meaning they are expiring 1 week after being listed. IMO, the fact that there are options that expire each day of the week doesn't make them Daily.
For example, Daily would be an option listed on a Monday that expires at the end of that day.
 
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