Nasdaq introduces zero-day expiry options for ETFs, heightening trading risks

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  • Stock Market News
Nasdaq introduces zero-day expiry options for ETFs, heightening trading risks
Credit: © Reuters.

In a bid to cater to traders looking to capitalize on short-term market movements, Nasdaq has rolled out new zero-day expiry options contracts. These contracts, which track commodity and Treasury-based ETFs, are designed for those who aim to profit from rapid price changes in assets such as gold and oil. The introduction of these high-risk options comes as part of a broader trend in the financial industry that has seen an increase in leveraged options-based ETFs since last year.

These zero-day expiry options, also known as 0DTE options, are characterized by their extreme sensitivity to time decay, meaning their value can decrease quickly as the expiration time approaches. Due to this feature, along with their speculative nature, these options require constant monitoring and pose a high risk of the total premium loss if the market does not move as predicted.

Given the complexity and the significant risk exposure associated with these instruments, Nasdaq urges traders to proceed with caution. The swift value shifts inherent in these options underscore the potential for both amplified returns and amplified losses, demanding a high level of vigilance from those who choose to engage with them.

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