1. 0DTE options surged to record high of 61% in May. 2. Retail investors drove the rise in 0DTE trading volumes. 3. Overall options-market activity eased, contrasting with 0DTE growth. 4. Cboe expanded daily contracts; Nasdaq plans to offer more weeklies. 5. 0DTE strategies could expand to major stocks like Tesla and Nvidia.
Increased retail trading and interest in 0DTE options indicate a bullish sentiment, which historically correlates with a rising market, often boosting index prices. For instance, during prior surges in options activity, S&P 500 values typically trended positively.
The surge in trading volume indicates a significant shift towards options trading among retail investors, which often translates into short-term volatility and potentially bullish trends for the S&P 500.
The immediate effect of heightened 0DTE options trading is likely to impact market sentiment and prices in the short-term, particularly as market volatility often accompanies such trading spikes.