Nasdaq introduces midweek options experimenting beyond stocks into other assets
In an effort to keep up with the growing interest in short-dated options, Nasdaq has launched new two-week options contracts that expire on Wednesdays, not Fridays. These contracts are based on popular exchange traded products, including the SPDR S&P 500 ETF Trust and the Invesco QQQ Trust.
This expansion of the short-term options market beyond stock index products could potentially lead to an increase in “zero-day to expiration” (0DTE) options trading. The move comes as options trading that is about to expire has significantly expanded in recent years, with data showing that the percentage of options trading on the S&P 500 in contracts that expired in less than a day has increased from 8% in 2018 to at least 42% in every month this year.
The popularity of short-term options trading has generated mixed reactions on Wall Street. While some, like JPMorgan strategist Marko Kolanovic, have expressed concerns about the potential for extreme volatility events, others, such as Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research, are less worried, seeing the spread of risk throughout the month as less risky.
Nasdaq has assured that it does not expect any “market disruptions” from the introduction of the new Wednesday options. The move marks a significant shift in the options market landscape and highlights the growing interest in alternative expirations and midweek options trading.
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