From Dow Jones & Company:



The article discusses a sudden and unexpected drop in the S&P 500 index, which occurred after 2 p.m. Eastern time, on Wednesday. Analysts attribute this drop to the rise in popularity of zero-day to expiry options, or “0DTEs,” which are being compared to lottery tickets for individual investors and tactical protection for large funds. These options are relatively cheap to purchase and give an investor the right to buy or sell a stock before a certain expiration date. Wednesday’s stock-market pullback is attributed to these zero-day options, as reported by Bloomberg. Prior to this sudden drop, the S&P 500 was close to its all-time high, and the Dow Jones and Nasdaq were poised for a 10th straight day of gains. Some analysts disagree over what precisely triggered the stock market’s declines, with some attributing it to overbought conditions and thin trading ahead of the year-end holiday season. The article also discusses the influence of the launch of an exchange-traded fund from ProShares that uses short-dated “zero days to expiry” options on the S&P 500. However, on the following day, the stock market resumed its rally, with the S&P 500 inching back towards its record close.



Original: Here are the risky options being linked to the sudden demise of Wednesday’s initial stock-market rally