The Rise of Zero-Day Options: Potential Game-Changer for Retail Investors

In a significant development for retail investors, Nasdaq has formally requested the Securities and Exchange Commission (SEC) to allow options tied to popular individual stocks like Nvidia and Tesla to start trading on Mondays and Wednesdays. This move seeks to expand the trading options available in the burgeoning zero-days-to-expiry (0DTE) options market, which has exploded in popularity over the last few years.

Understanding 0DTE Options

To put it simply, 0DTE options are those that are nearing their expiration, typically expiring at the end of the trading session. They present a unique opportunity for traders: a small window where an upward push in the stock price can lead to outsized gains if an option is “in the money.” But let’s be clear — the flip side is a significant risk, as the likelihood of these options expiring worthless is high.

Market Dynamics Favoring the 0DTE Boom

The options market has witnessed a substantial uptick in trading volumes, and this is no accident. The average daily trading volume of 0DTE options reached record levels during the first quarter of 2025, reflecting a trend that began before the pandemic. While more sophisticated institutional investors have long dominated the index options market, retail investors have flocked to individual stock options as these products become increasingly accessible through online trading platforms.

2024 already set a staggering record with over 12 billion contracts traded, and forecasts suggest the figure could soar to 14 billion in 2025. Such numbers tell us that retail investors are not only participating; they are driving a large portion of this growth.

What Nasdaq’s Proposal Means for Retail Traders

Nasdaq’s request has the potential to further democratize access to these instruments. Currently, 0DTE options are limited primarily to popular stock indices and ETFs like the Invesco QQQ Trust. If approved, this expansion would offer retail investors more opportunities to capitalize on market volatility without being confined to traditional Friday expirations.

The strategic decision to limit Monday and Wednesday expirations to specific stocks and ETFs aims to mitigate risks for traders. According to a Nasdaq representative, options for these stocks will not be listed during earnings reporting periods, which often lead to erratic swings in pricing. This responsible approach aims to protect inexperienced traders from unexpected market movements.

Luck or Strategy? The Dual Nature of 0DTE Options

Garrett DeSimone from OptionMetrics suggests that while amateur investors in the options market are often seen chasing “lottery tickets,” there is more nuance to their trading strategies. He points out that many retail investors engage in spread strategies that utilize multiple contracts, allowing them to manage their risk more effectively. Yet the necessity of keeping risk profiles in check couldn’t be more pronounced, particularly in a market frequently described as high-stakes.

JJ Kinahan, CEO of IG North America, echoes the sentiment of caution. The risk associated with these contracts necessitates a significant educational effort to inform retail investors about exercise and assignment risks. This is crucial, especially as more traders dive headfirst into what has been characterized as an exciting but perilous market.

Conclusion: The Road Ahead for 0DTE Options

The potential approval of Nasdaq’s request could serve as a catalyst for even more volatility in the stock market. With retail investors eagerly embracing chances to profit in a climate of uncertainty, the landscape of options trading is ripe for transformation. However, it is essential for these investors to proceed with a sense of prudence, balancing risk and reward as they navigate the increasingly complex world of options trading.

The engagement of retail traders in 0DTE options could signal a powerful shift in market dynamics, but this shift must be approached with a healthy dose of skepticism and diligence. As government regulators and exchanges seek to accommodate these changes, the prudent trader knows: opportunity is often intertwined with risk, and understanding both is essential for long-term success.