Transcript for: 0DTE Options: A New Trend in Trading
You can do some crazy stuff
with options like 10K to 90K - [Narrator] Zero days to
expiration options, or 0DTE have exploded in popularity
in the last year. They allow investors to
bet on stock market moves within the same day, which can result in big
wins and big losses. - This is one of the biggest
shifts I've seen in markets of the past decade. - [Narrator] Here's why
0DTE options have taken off despite being some of the
riskiest in the entire market. - So I got into 0DTE in 2020
during the whole like lockdown. - [Narrator] Drayson Little
graduated from college in 2021 and has been trading options
full-time for about a year. He lives in Las Vegas, so his day typically
starts around 5:30 AM, an hour before the market
opens on the East Coast. - [Drayton] First things first, is I'll head over to Twitter, that's where I get all my news - [Narrator] On big news days, like when inflation data is released, he says, "It's easier to
spot a trend in the market." - [Drayton] You can see a massive move into and from that PCE number - [Narrator] Which he says, "Is the best time to trade 0DTE." - In one minute, I had made $100. - [Narrator] He says, "He usually bets a few thousand dollars per trade. One of his biggest one-day profits was about $14,000, and biggest
loss was about $12,000." - It's like euphoria, it's
like winning a lottery, but then you also have your crazy lows. - [Narrator] 0DTE options
expire the same day they're purchased,, which is why... - They are some of the
most sensitive to changes in the stock's price. So that's why you can see them zip higher or crash incredibly quickly. - [Narrator] But that's
also part of the reason they're so appealing to traders. - Your upside potential is infinite. It can be 500%, it could be 1000%. - [Narrator] Traders are
also drawn to 0DTE options because they're cheaper
than longer-dated contracts. - But often the odds
are stacked against you. A lot of these retail traders do end up losing a lot of money. - [Narrator] Drayson says,
"Some of his biggest losses occurred in his first year of trading. - I think I probably lost
at the time during 2020, upwards of like $65,000, and this was when I was
a full-time student. I was an entrepreneur before I had made some
money from E-commerce, I lost 20, 30% of it, and it's just very, it just feels really bad,
to be honest with you. - [Narrator] But he says,
"The possibility of big wins enticed him to keep trading." - The thing is, with a nine
to five, it's not scalable. You only make so much during these hours compared to trading, where
you take one crazy trade, like just one trade and
you make a million dollars. - [Narrator] This type of options trading has long been reserved for professionals with sophisticated technology and tools. But in the last few years, retail traders have played a big role in driving 0DTE trading
volumes to record highs. - It's really become a viral phenomenon. You know, when I was looking
at hashtags for 0DTE online, there are tens of thousands
of mentions of 0DTE, just this year alone. A few years ago, there
were no such mentions. - [Narrator] Part of the reason
is that options exchanges expanded 0DTE contracts to
every day of the week last year to capitalize on this boom. - And that just unleashed
a frenzy of activity. And traders I was talking to were saying, "We've never seen something take off the way 0DTE trading has." - [Narrator] Many of these retail traders started with meme stocks. - This is really the
continuation of a trend the past few years as more people have entered markets where they wanna bet on sports, they wanna bet at the casino, and they also wanna bet on stocks. - [Narrator] But some experts think all this betting could mean
trouble for the market. - There's a lot of concern from a lot of industry
analysts and pundits that suggest that 0DTE
could kind of bring about an end-of-day scenario in markets. - [Narrator] That's because
when professional traders buy or sell options, they also buy or sell stocks
to hedge their positions. - That creates worries that if there is a big move in the market and all of a sudden, someone's doing a ton of
buying and selling of options that could ripple over
into the stock market. - [Narrator] For example,
during the meme-stock mania, there were concerns that options activity was exacerbating the volatility. - I think a lot of the fear
now is that 0DTE volumes will put the market in the same position. The odds of that happening is a lot lower than in a situation like
GameStop or meme-mania. - [Narrator] While this concern is hotly debated on Wall Street Kochuba says, "0DTE options have become such a large part of trading, that when there's an
unexplainable move in the market." - You can look at the 0DTE volumes and movement in 0DTE and understand that this could be driving
those strange behaviors. - I wouldn't regret anything. I honestly find it, it has taught me a lot more things and has leveled me up as a person, rather than pull me down. - [Narrator] With the
money he made from trading, he says, 'He was able to buy... - One of my dream cars, the
AMG GTR, get back to my family, travel around the world,
and then I bought a Rolex. So that was pretty cool. - [Narrator] He says,
"His goal for next year is to make six-figures every month and launch an options trading course." - You're gonna have your lows,
you're gonna have your highs, but as long as you just
keep moving forward, you'll eventually get to your end goal. (gentle music)