From Quiver Quantitative:



– Zero-day options (0DTE) are gaining traction on Wall Street among quantitative investment strategists (QIS), with major banks like Citigroup, JPMorgan, and UBS Group incorporating them into their equity products. These derivative contracts expire within 24 hours and are popular for their low-cost bets on volatility and portfolio diversification.

– Citigroup, JPMorgan, and UBS actively incorporate 0DTEs into QIS offerings, appealing to risk management needs, and these options have attracted a diverse clientele from hedge funds to pension funds due to their unique risk profiles and their ability to diversify portfolios.

– The proliferation of 0DTEs has spurred concerns about market stability; however, as trading diversifies across different strategies, the risk of market imbalance decreases, and as the zero-day options market continues to evolve, quants are expected to keep developing innovative strategies to capitalize on this trend, indicating that the competition in this new market segment is just beginning.



Read more: Wall Street Banks Embrace Zero-Day Options in Systematic Trading Surge