Gamma On
Gamma On EP7: 0DTE Options & Gamma Flows
Dec 24, 2024
Henry Schwartz, VP of Global Client Engagement at Cboe Global Markets, shares his insights on the dynamic world of 0DTE options. He discusses how these options are reshaping trading strategies and influencing market behaviors. The conversation dives into the intricate relationship between 0DTE trading and gamma strategies, examining market dynamics and trends in option selling. Schwartz highlights the role of liquidity providers and market makers, and stresses the importance of implied volatility in navigating today's volatile market.
30:00
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Quick takeaways
- The rise of 0DTE options represents a significant shift in trading strategies, allowing traders to take advantage of short-term market fluctuations effectively.
- Understanding gamma exposure is essential as it influences market movements and trader behavior, affecting the overall stability of the trading environment.
Deep dives
The Rise of Zero-Day Options
Zero-day options, or options that expire within the same trading day, have emerged as a major trend in the trading landscape. These options allow traders to capitalize on short-term market movements due to the daily expiration cycle introduced in recent years. For example, the SPX product, known for its daily expiring options, has seen such a significant increase in volume that it accounts for nearly half of its overall activity, equating to about 1.5 million contracts a day. This surge reflects a shift in trading strategies; traders are increasingly leveraging zero-day options for quick, tactical positions rather than traditional longer-term strategies.
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