3 ms·

Zero day options rose from 5% of total options volume in 2016 to 61% by May 2025

OutOfHere 1y ago
Zero-day SPY options are now the only thing I trade. It saves me from the risk of a big move against me overnight. Over several months I have refined a strategy, although I probably have things left to discover. The real learning won't be done until experience is gained with their fully automated execution.
- id00 1y ago
  Yeah, all strategies with things like that work very well until they don't. Odte situation reminds me of retail investors discovering $XIV, having a good time using "safe" strategies and then getting wiped clean by the volatility spike in 2018
  - OutOfHere 1y ago
    If it didn't work, of course I wouldn't use it. Duh. The only way to survive in the long term is to become a part of the ecosystem that delivers more value more than it extracts. This is not impossible. Moreover, the analogy with XIV is 100% bogus. There is nothing safe about 0DTEs. If you knew the first thing about 0DTE, you would know that it is held very selectively, not like XIV. A good number of the 0DTEs get wiped to $0 every day, not once in ten years. XIV was unforgiving just once; 0DTEs are unforgiving as a routine. Also, the logic behind inverse volatility offerings has been updated to mitigate the risk of what happened, not that it holds any relevance to this discussion.
  - verteu 1y ago
    If they are long options (most likely for retail), their position is convex and benefits from volatility. It's precisely the opposite of holding $XIV.
    - id00 1y ago
      My comparion was about people often using risky products without fully realsing their risk
  - deleted 1y ago
    [deleted]
  - kqr 1y ago
    Why would one choose to be long an inverse volatility instrument? How is that in any world safe?
    - verteu 1y ago
      Look at the total returns of VXX and you'll see why it's tempting to take the opposite position. There are plenty of reasonable arguments to short vol, eg: https://www.nomura.com/events/9th-annual-global-quantitative-investment-strategies-conference/resources/upload/3_30_Nick_Firoozye.pdf https://www.nomura.com/events/9th-annual-global-quantitative...
- quamserena 1y ago
  Until a Trump tweet causes a big move against you during the day? I’m interested in your strategy, pray tell.
  - OutOfHere 1y ago
    You are absolutely right. Trump has done this many times this year, resulting in a loss for me each of those times. I have used it as an opportunity to refine my strategy to limit the damage from the loss so it doesn't undo all my gains or worse.
  - deleted 1y ago
    [deleted]

Zero-day SPY options are now the only thing I trade. It saves me from the risk of a big move against me overnight. Over several months I have refined a strategy, although I probably have things left to discover. The real learning won't be done until experience is gained with their fully automated execution.

id00 1y ago
Yeah, all strategies with things like that work very well until they don't. Odte situation reminds me of retail investors discovering $XIV, having a good time using "safe" strategies and then getting wiped clean by the volatility spike in 2018
- OutOfHere 1y ago
  If it didn't work, of course I wouldn't use it. Duh. The only way to survive in the long term is to become a part of the ecosystem that delivers more value more than it extracts. This is not impossible. Moreover, the analogy with XIV is 100% bogus. There is nothing safe about 0DTEs. If you knew the first thing about 0DTE, you would know that it is held very selectively, not like XIV. A good number of the 0DTEs get wiped to $0 every day, not once in ten years. XIV was unforgiving just once; 0DTEs are unforgiving as a routine. Also, the logic behind inverse volatility offerings has been updated to mitigate the risk of what happened, not that it holds any relevance to this discussion.
- verteu 1y ago
  If they are long options (most likely for retail), their position is convex and benefits from volatility. It's precisely the opposite of holding $XIV.
  - id00 1y ago
    My comparion was about people often using risky products without fully realsing their risk
- deleted 1y ago
  [deleted]
- kqr 1y ago
  Why would one choose to be long an inverse volatility instrument? How is that in any world safe?
  - verteu 1y ago
    Look at the total returns of VXX and you'll see why it's tempting to take the opposite position. There are plenty of reasonable arguments to short vol, eg: https://www.nomura.com/events/9th-annual-global-quantitative-investment-strategies-conference/resources/upload/3_30_Nick_Firoozye.pdf https://www.nomura.com/events/9th-annual-global-quantitative...
quamserena 1y ago
Until a Trump tweet causes a big move against you during the day? I’m interested in your strategy, pray tell.
- OutOfHere 1y ago
  You are absolutely right. Trump has done this many times this year, resulting in a loss for me each of those times. I have used it as an opportunity to refine my strategy to limit the damage from the loss so it doesn't undo all my gains or worse.
- deleted 1y ago
  [deleted]