As of last weekend, as the global 'stock king,' $NVIDIA (NVDA.US)$ The actual volatility indicator for the past 30 days has risen to around 80, which is about twice that of bitcoin. After setting consecutive records for the largest single-day market cap increase and decrease in the history of US stocks in the past few weeks, the 'stimulus level' of Nvidia's trend has undoubtedly impressed many investors.

And such a turbulent scenario might seem commonplace in the future:

Because the 'zero date options' that have been causing a stir in the US stock market over the past few years may soon venture into individual stocks. And popular stocks like Nvidia and Tesla, which all market participants are constantly paying attention to, undoubtedly have the potential to become the preferred game targets for 'zero date options' traders.

In recent years, zero-day expiration options (0DTEs) have increasingly become the focus of Wall Street traders and have led to a surge in US stock options trading. The 'lifespan' of these options contracts is very short, usually expiring within 24 hours, making them relatively inexpensive.

Zero date options are especially popular among amateur investors, despite many skeptics calling it an alternative form of gambling. In fact, it is true that many speculators treat zero date options as an exciting 'lottery': they invest their funds in high-risk bets, either losing everything or making huge returns in just one hour or even less.

So far, the zero date options craze has been limited to options linked to indices such as the S&P 500 Index or the Nasdaq 100 Index. However, the next open field may be options for individual stocks like Tesla or Nvidia.

Are individual stock zero date options coming?

According to insiders familiar with the situation, brokers, exchanges, and electronic trading companies, including Charles Schwab and Citigroup Securities, have discussed the pros and cons of introducing zero-date option models into individual stock options over the past year.

Many financial industry executives are currently hoping that the launch of zero-date stock options will bring more trading profits. Although this will also bring new risks to investors, especially on days when financial reports are released after 4 p.m. Eastern Time in the United States.

Currently, options linked to individual stocks usually expire on Friday, and the risks behind them are actually not large, so there are rarely important company financial reports released on Friday. However, if zero-date options are to be introduced into individual stock options, the exchange will need to add new expiration dates from Monday to Thursday.

It is reported that at an industry closed-door meeting, retail brokers such as Robinhood, Schwab, Tastytrade, and E*Trade under Morgan Stanley advocated a cautious attitude, as they were concerned that if investors' options trading were to collapse, they might face customer protests.

But other companies, including large options market makers Susquehanna International Group and Nasdaq, are actively pushing for the introduction of daily expiration system into individual stock options. These market makers and exchanges are expected to gain more profits from the further development of zero-date options.

According to informed sources, zero-date options may not appear in individual stock options until later in 2025 at the earliest. Some supporters of this approach suggest starting with a limited introduction - initially covering options for a few stocks, in order to give investors some time to adapt.

In response to this, some adventurous investors are clearly already eager to get involved in zero-date stock options. Michael McCaskill, 48, is a day trader who often trades short-term options in the hope of hitting the jackpot. He is very interested in the prospect of more frequent expiration of individual stock options.

McCaskill, who has previously wagered and profited on GameStop, Netflix, and PayPal, said, 'The percentage return is incredible. Whether it's weekly or daily, short-term options can bring you this kind of return.'

High risk, high return.

Options give investors the right to buy or sell stocks at a specific price (strike price) before the specified expiration date. This financial derivative was once seen as a complex tool for sophisticated traders, but has become increasingly popular among retail investors in the United States in recent years, especially the zero date options that have been all the rage in recent years.

Over the years, the options market has continued to develop, with increasing expiration frequencies, from quarterly to monthly, and even weekly and daily.

In 2022, the largest options exchange operator in the United States, Cboe Global Markets, further expanded the product range of its S&P 500 index options, with expirations covering all five trading days of each week.

Due to the extremely limited expiration time of zero date options, the prices of these options are cheaper than options with longer expirations, and the leverage is higher. The huge leverage brings huge profits, which has also attracted a large number of retail investors to flock to speculation.

Generally, when index options expire, settlements are made in and out of investors' brokerage accounts in cash. Stock options, on the other hand, are settled by buying or selling stocks, which may actually bring investors more potential risks.

For example: if a stock option is "in the money" at 4:00 p.m. Eastern Time, which means it is profitable to exercise at the strike price, it will be automatically exercised. Therefore, if an investor holds call options for Nvidia with a strike price of $124, allowing him or her to buy 100 shares of Nvidia stock, and Nvidia's closing price for the day is higher than that price, the option will be exercised at $124 and bought.

Usually, this would be a good trade. But if this happens on August 28th – when the chip manufacturer releases much-anticipated quarterly earnings after hours, investors will suffer heavy losses.

For example, Nvidia closed at $125.61 on August 28th. However, Nvidia's disappointing financial performance a few minutes later led to a sharp drop in its stock price after hours, with a significant gap down the next morning to $121.36. In this scenario, buying the stock at $124 would obviously no longer be attractive.

Although some savvy investors can avoid this outcome by sending 'no exercise' instructions to their broker, the ease and timing of sending such instructions to different brokerages often vary. Some brokers set a deadline of 4:00 pm Eastern Time, meaning their clients must make decisions without knowing the financial performance.

It is not hard to foresee that once zero-day options truly start to involve individual stocks, the daily fluctuations of some popular stocks are likely to be further magnified. The uncertainty from the options market may add more instability to market behavior, closely monitoring the response of such new financial products may become very important.

Editor/Somer