Summary Retail Traders Love 0DTE Options... But Should They? by Heiner Beckmeyer, Nicole Branger, Leander Gayda :: SSRN deliverypdf.ssrn.com
1,104 words - html page - View html page
One Line
Retail traders actively trade in 0DTE options, but the effectiveness of this strategy is uncertain.
Slides
Slide Presentation (7 slides)
Key Points
- The study investigates the implications of trading in options that expire on the same day, known as "0DTE" options.
- The majority of retail investors' trades in S&P 500 options are in 0DTE contracts.
- Retail investors experience losses on average when trading 0DTE options.
- Retail investors correctly consider the expensiveness of 0DTE options, but significant spreads charged by market makers contribute to their losses.
- The study warns against unrestricted access to complex trading vehicles for investors without sufficient financial education.
Summaries
15 word summary
Retail traders heavily trade in 0DTE options, but the benefits of this strategy are questionable.
74 word summary
This study examines the implications of trading in options that expire on the same day, known as "0DTE" options. The research finds that the majority of retail investors' trades in S&P 500 options are in 0DTE contracts,
The article titled "Retail Traders Love 0DTE Options... But Should They?" explores the popularity of 0DTE (zero days to expiration) options among retail traders and questions whether this trading strategy is truly beneficial. The authors analyze the
Raw indexed text (7,176 chars / 1,104 words / 225 lines)
Retail Traders Love 0DTE Options... But Should They? by Heiner Beckmeyer, Nicole Branger, Leander Gayda :: SSRN
Skip to main content
Make use of personalized features like alerts and saved searches
Create account
Sign in
Product & Services
Research Paper Series
Site Subscriptions
Sponsored Services
Jobs & Announcements
Conference Papers
Partners in Publishing
First Look
Subscribe
Submit a paper
Browse
Rankings
Top Papers
Top Authors
Top Organizations
Blog
Contact
Product & Services
Research Paper Series
Site Subscriptions
Sponsored Services
Jobs & Announcements
Conference Papers
Partners in Publishing
First Look
Subscribe
Submit a paper
Browse
Rankings
Top Papers
Top Authors
Top Organizations
Blog
Contact
Create account
Sign in
Download This Paper
Open PDF in Browser
Add Paper to My Library
Share:
Permalink
Using these links will ensure access to this page indefinitely
Copy URL
Copy DOI
Retail Traders Love 0DTE Options... But Should They?
34 Pages
Posted: 13 Apr 2023
See all articles by Heiner Beckmeyer
Heiner Beckmeyer
University of Mnster
Nicole Branger
University of Mnster - Finance Center Muenster
Leander Gayda
University of Mnster - Finance Center Muenster
Date Written: March 30, 2023
Abstract
Our study is the first to investigate the implications of trading in options that expire on the same day - so-called "0DTE" options. Almost the entire growth of trading in S&P 500 index options can be traced back to demand for 0DTE options. We use recent exchange-related developments to identify option trades that originate from retail investors, and find that more than 75% of their trades in S&P 500 options today are in 0DTE contracts. While retail investors benefit from significant price improvements, such as lower effective spread, they experience losses on average: Between February 2021 and February 2023, retail investors lost $184,000 on the average day; since the introduction of a daily expiration calendar in May of 2022, this number has grown to average losses of $358,000 per day. We find that retail investors correctly take the expensiveness of 0DTE options into account when placing their orders, but that the substantial spreads charged by market makers lead to significant losses. Our study is a cautionary tale against unrestricted access to highly complex trading vehicles by investors who lack sufficient financial education.
Keywords:
Retail Trading, Options, WallStreetBets, Payment for Order Flow, 0DTE
JEL Classification:
G4, G5, G12, D4
Suggested Citation:
Suggested Citation
Beckmeyer, Heiner and Branger, Nicole and Gayda, Leander, Retail Traders Love 0DTE Options... But Should They? (March 30, 2023). Available at SSRN:
https://ssrn.com/abstract=4404704
or
http://dx.doi.org/10.2139/ssrn.4404704
Heiner Beckmeyer (Contact Author)
University of Mnster (
email
Schlossplatz 2
Muenster, D-48143
Germany
HOME PAGE:
http://heinerbeckmeyer.com
Nicole Branger
University of Mnster - Finance Center Muenster (
email
Universitatsstr. 14-16
Muenster, 48143
Germany
+49 251 83 29779 (Phone)
+49 251 83 22867 (Fax)
HOME PAGE:
http://www.wiwi.uni-muenster.de/fcm/fcm/das-finance-center/details.php?weobjectID=162
Leander Gayda
University of Mnster - Finance Center Muenster (
email
Schlossplatz 2
Muenster
Germany
Download This Paper
Open PDF in Browser
0 References
Do you have a job opening that you would like to promote on SSRN?
Place Job Opening
Paper statistics
Downloads
2,870
Abstract Views
7,122
Rank
7,468
PlumX Metrics
Plum Print visual indicator of research metrics
Usage
Abstract Views:
7064
Downloads:
2846
Captures
Readers:
15
Mentions
News Mentions:
Social Media
Tweets:
54
see details
Plum Print visual indicator of research metrics
Usage
Abstract Views:
7064
Downloads:
2846
Captures
Readers:
15
Mentions
News Mentions:
Social Media
Tweets:
54
see details
Feedback
Feedback to SSRN
Feedback
(required)
Email
(required)
Submit
If you need immediate assistance, call 877-SSRNHelp (877 777 6435) in the United States, or +1 212 448 2500 outside of the United States, 8:30AM to 6:00PM U.S. Eastern, Monday - Friday.
Submit a Paper
Section 508 Text Only Pages
SSRN Quick Links
SSRN Solutions
Research Paper Series
Conference Papers
Partners in Publishing
Jobs & Announcements
Special Topic Hubs
SSRN Rankings
Top Papers
Top Authors
Top Organizations
About SSRN
SSRN Objectives
Network Directors
Presidential Letter
Announcements
Contact us
FAQs
Copyright
Terms and Conditions
Privacy Policy
We use cookies to help provide and enhance our service and tailor content.
To learn more, visit
Cookie settings | Your Privacy Choices
This page was processed by aws-apollo-l200 in
0.094
seconds
We use cookies that are necessary to make our site work. We may also use additional cookies to analyze, improve, and personalize our content and your digital experience. For more information, see our
Cookie Policy
Cookie Settings
Accept all cookies
Cookie Preference Center
We use cookies which are necessary to make our site work. We may also use additional cookies to analyse, improve and personalise our content and your digital experience. For more information, see our
Cookie Policy
and the list of
Google Ad-Tech Vendors
You may choose not to allow some types of cookies. However, blocking some types may impact your experience of our site and the services we are able to offer. See the different category headings below to find out more or change your settings.
You may also be able to exercise your privacy choices
as described in our
Privacy Policy
Allow all
Manage Consent Preferences
Strictly Necessary Cookies
Always active
These cookies are necessary for the website to function and cannot be switched off in our systems. They are usually only set in response to actions made by you which amount to a request for services, such as setting your privacy preferences, logging in or filling in forms. You can set your browser to block or alert you about these cookies, but some parts of the site will not then work. These cookies do not store any personally identifiable information.
Cookies details
Functional Cookies
Functional Cookies
These cookies enable the website to provide enhanced functionality and personalisation. They may be set by us or by third party providers whose services we have added to our pages. If you do not allow these cookies then some or all of these services may not function properly.
Cookies details
Performance Cookies
Performance Cookies
These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site.
Cookies details
Targeting Cookies
Targeting Cookies
These cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. If you do not allow these cookies, you will experience less targeted advertising.
Cookies details
Back Button
Cookie List
Search Icon
Filter Icon
Clear
checkbox label
label
Apply
Cancel
Consent
Leg.Interest
checkbox label
label
checkbox label
label
checkbox label
label
Confirm my choices