- 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)