Day traders lose $358,000 per day gambling on zero-day options

4/22/2023

Day traders lose $358,000 per day gambling on zero-day options, per Bloomberg.

This is since May 2022.

“We are seeing the study as a cautionary tale,” Heiner Beckmeyer, who co-authored the study along with Nicole Branger and Leander Gayda, said in an interview. “These 0DTE options have huge leverage. They’re a one-or-zero bet, so you have the opportunity to make a lot of money, but you also have the opportunity to lose a lot. And that’s what we find in the paper that on average, it seems to be to the detriment of these retail investors.”

By the researchers’ estimate, the retail crowd’s market share in 0DTE trading volume has expanded, topping 6% in 2022 versus 4% in the prior year. Among all of the cohort’s trades in S&P 500 options, such flashy contracts make up more than 75% of the total, per Bloomberg.

JPMorgan has said that while buying or selling 0DTE options tended to be profitable in the first 10 minutes of trading, two-thirds of the gains came in the first minute.

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