Zero DTE Options Fuel Record SPX Trading Volumes, With No Signs Of Slowing Down: Expert

Robert A. Hocking, senior vice president and global head of product innovation at Cboe Global Markets, revealed that Zero Days to Expiration (Zero DTE) options now account for nearly 47% of SPX trading volume in 2024.

That’s a dramatic rise from just eight years ago.

“Zero DTE accounted for roughly 5% of SPX option volumes in 2016,” Hocking explained at Benzinga’s latest virtual event, Managing Volatile Markets with 0DTE Options, which was sponsored by Cboe. “This has jumped to 45% by the end of 2023, and it's crept up to around 47% in 2024,” he added.

As a result, SPX's overall trading volume has doubled daily to approximately 3 million contracts, compared to 1.5 million in 2016.

Retail And Institutional Traders Fuel Growth

Both retail and institutional traders have driven the rapid expansion of Zero DTE options. Initially embraced by retail traders, institutional participation has increased, further boosting liquidity in the market.

Hocking noted that Zero DTE options are now a major part of the trading landscape, with institutional players helping sustain their growth.

“What's fascinating is that Zero DTE now represents 1.4 million contracts daily—more than the total SPX daily average volume in 2016,” Hocking stated. “It's become a crucial tool for managing short-term trades and risk exposure, which is why it's seen such broad adoption.”

Impact on Market Volatility

Despite the surge in Zero DTE trading, concerns about its potential effect on market volatility have not been realized. Hocking emphasized that Cboe’s data shows no evidence linking these options to increased market turbulence. “We’ve been closely monitoring the data, and there’s no sign that Zero DTE options are adding risk to the market,” he said.

Introducing Zero DTE options has provided traders with new ways to manage both the upside and downside of their portfolios, offering greater flexibility in their strategies.

Future of Zero DTE Options

As Zero DTE trading continues to flourish, Cboe is exploring further opportunities to meet the growing demand from institutional investors. Hocking suggested that more tools and data will likely emerge as the market for these options expands.

“Zero DTE is here to stay,” Hocking concluded. “Its growth reflects the shift in how retail and institutional traders approach the options market.”

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