Day traders use such options to make short-term bets on the movement of the underlying assets, with the potential to generate quick profits.Īccording to Charlie McElligott of Nomura, some financial firms are behaving like “full-tilt day traders”, using options plays to “amplify and ‘juice’ the intended directional market move”. Zero Days to Expiration (ODTE) options are options contracts that expire on the same day they are issued, and they are more commonly used to gain exposure to equities or ETFs with high liquidity. This is largely due to an explosion in the number of traders using zero days to expiration, or ODTE options. On February 2, more call options were traded than ever before. The ‘ODTE’ options mania that has transfixed Wall Street is a short-term trend that’s influencing the S&P 500’s valuation. Two investing bubbles are currently inflating the S&P 500’s valuation beyond most comparable benchmarks, and they are a biproduct of ODTE options and passive investing. If we break down the relative shares, SPY, IVV, and VOO alone represent 53% of the overall pie.īased on the these figures, the S&P 500 is clearly a very popular investment. Top ten equity ETFs ranked by assets under management. Among the top ten equity ETFs, the top three are all S&P 500 index passive funds. With approximately $359 billion in assets. Algorithmic trading and options market speculation influences the S&P 500 index.Īlmost everyone is invested in the S&P 500 index, which may present a problem.Īccording to ETF.com, there are 2,205 exchange traded funds (ETFs) currently trading in the US market.
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