More and more capital going into the business of selling ETFs with embedded options selling features
Source: TME, Nomura
Nasdaq has now listed 0DTE Options (Zero Days to Expiry) for ETFS tracking silver, gold, oil, natural gas, and treasuries. Let the games begin! 🎰
Financial Times >>> "Trading in a controversial type of derivative known as “zero-day” options is spreading to Treasury and commodity markets, as Nasdaq and other exchange groups try to replicate a boom that has transformed trading in US stock indices. Nasdaq this week listed a series of new options contracts tracking some of the most popular exchange traded funds investing in gold, silver, natural gas, oil and long-term Treasuries. Options contracts give investors the right to buy or sell an asset at a fixed price by a given date. Trading a contract on the day it expires is known as zero-day trading and can be used to bet on or hedge against extremely short-term market moves. Zero-day trading in options tied to the S&P 500 index boomed in popularity during the coronavirus pandemic. Initially viewed as a temporary phenomenon driven by speculative retail traders, the surge sparked concern among some analysts and regulators that it could create systemic risk by exacerbating market moves. Source: FT, Barchart
Goldman's Derivatives desk:
Demand for TLT calls and call spreads exploded this week. That's because "this is a cheap way to play for a snapback in bonds." As shown below, average TLT call volume this was over 350k contracts per day, an all-time highs...
Zero Day Options (0DTE) now account for half of total SP500 options volume
Source: Barchart
0DTE trading in $SPX options accounts for a record 49% of total trading volume
Source: Markets & Mayhem
Crude Oil $100 calls over the next year have seen their open interest rise to 120,000 as of Thursday. $90 and $100 calls are also the 2 most held strikes over the next 12 months
Source: Barchart, Bloomberg
Get ready for 0DTEs, Europe
Source: Markets Mayhem, Bloomberg
At least a positive (contrarian) news
The SPX Put to call ratio is at its highest since the SVB banking crisis. In a short term view, the 'PUT BUS' is getting crowded and a crowded trade is usually not a good trade. Source: JC Investment
