Traders spurn zero-day options in this week's market tumble

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0DTE Options Nouvelles

Equity Options,Options Research,Market Participants

Investors avoided trendy short-dated equity options and looked to longer-tenor contracts for protection during a meltdown in U.S. stock earlier this week...

NEW YORK - Investors avoided trendy short-dated equity options and looked to longer-tenor contracts for protection during a meltdown in U.S. stock earlier this week, exposing the limitations of so-called 0DTE options in guarding against sustained market gyrations, data showed.

"What we've seen here is a shift from short-term hedges to people saying, 'oh, my gosh, I need something longer dated'," said Jim Carroll, portfolio manager at Ballast Rock Private Wealth. Volume in the short-dated contracts rebounded to about 42% the day following the selloff, as markets calmed, data from Trade Alert showed.In the throes of the selloff, investors fearful that the volatility surge would be sustained saw little value in holding short-term contracts, said Craig Peterson, CEO of options research firm Tier 1 Alpha.

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