June 21: The Day That Changed Options Trading Forever

[Image] June 21: The Day That Changed Options Trading Forever You may not have noticed… But on June 21, 2021, something BIG happened in the options market… The SPDR S&P 500 ETF (NYSEARCA: SPY) — the biggest exchange-traded fund on the planet — started offering Zero-Day-to-Expiration (0DTE) options every day of the week. At first, this may have seemed like something that would only affect the most degenerate, ‘YOLO’ Reddit traders… But now, it’s clear that 0DTE options are doing much more than that… They’re shaking up the entire stock market. With that in mind, keep reading to see how 0DTE options have changed the derivatives market forever (and what it means for YOUR trading)… How 0DTE Contracts Are Changing the Stock Market The shift to everyday 0DTE was a big deal because it changed how people could play options on SPY — the most widely traded ticker in the world. And now, we’re starting to see the unignorable effects of this change… Before this, you could only trade SPY options on Mondays, Wednesdays, and Fridays. If you wanted to do short-term trading with SPY options, you had to plan around those three days. But now, with SPY options expiring every day, traders have more opportunities to make speculative bets. Since this change, we've seen some big shifts in the options market. Never in the past 40 years has options trading been this popular. 0DTE contracts now account for [50% of all S&P 500 options volume](. Moreover, these new short-term options are causing some weird things to happen with the overall market… For example, seeing the Invesco QQQ Trust (NASDAQ: QQQ) go up 11 days in a row is unusual. Or, take the 10-year Treasury bonds — a 50 basis-point move in two days is almost unheard of… QQQ 6-month daily chart — courtesy of [StocksToTrade.com]( But make no mistake, these abnormal moves are happening because of leverage — using borrowed money to make bigger bets. When institutional money is using leverage, share prices can jump up or down super fast. And with the overall trend going up, it's especially tough for bears and short sellers right now. These face-ripping squeezes can wipe out their positions in no time. But here’s the truth… These 0DTE bets are based more on guessing than on real stock values. I’m calling this moment in the market ‘Full Ponzi Bull Mode’ because the moves are happening due to leverage as opposed to actual equity. It's kind of like a Ponzi scheme, where the money you make depends on other people making bets after you. My View on Trading 0DTE Contracts Do I ever trade 0DTE options? No. I may occasionally buy contracts and hold them to the last day, but I never buy options that expire the day I’m trading. Why? Because I have 25 years of experience watching people get destroyed by day trading options… The risk/reward on 0DTE contracts is terrible, especially considering the notable upside on slightly longer-dated contracts. By buying contracts with more time on them, I give myself more wiggle room on the timing. If I’m right, the week-out contracts will still pay out handsomely. But if my timing is slightly off, the weeklies lose much less premium than the dailies. I don’t want my contracts to shed 50% of their value in 20 minutes, and I won’t be upset if my weeklies go up 100% while the dailies are up 200%. So, what does all of this mean for your trading? Here are three key points to consider: - Exercise caution. The current ODTE-driven moves are less predictable, meaning that your setups need to be excellent to warrant the risk. - Cut losses (and book profits) quickly. The short-dated nature of 0DTE contracts is causing price swings to happen more rapidly. That means you should cut any losing positions immediately and protect your profits at all costs. - Forget about fundamentals (for now). The big institutional money that’s driving the options market is completely ignoring fundamentals right now. Just look at Nvidia Corporation’s (NASDAQ: NVDA) earnings multiple, or Target Inc.’s (NYSE: TGT) insane surge on Tuesday, for clear evidence of this. Closing Thoughts Bottom Line: 0DTE has changed the game forever, and we’re feeling those shifts in a major way right now. You need to understand what's happening in the market, why prices are moving so fast, and how your trading choices can either make you money or cost you a lot. The SPY's daily options have opened up new ways to trade, but they've also made it more important than ever to understand the intricacies of the options market. Whether you're new to options or a seasoned veteran, keeping up with these changes and adjusting your strategy accordingly is crucial to beating the competition. And, as always… Stay Street Smart, Jeff Zananiri P.S. Millionaire trader Tim Sykes is finally revealing his patent-pending AI trading system — XGPT — for the first time ever. [Click here to get access to this game-changing strategy!]( P.P.S. INSIDER ACTIVITY ALERT! Ben Sturgill just caught wind of some ‘smart money’ insiders building a massive position… Even better, Ben’s hosting a webinar TODAY, November 17 at 8 a.m. EST to explain how YOU can start using ‘smart money’ signals to find great trade ideas with explosive potential! What are you waiting for?! 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