Investors 'Literally Gambling' With Zero-Day Options, Says Academy's Tchir

The video discusses the rise of daily and weekly options in the market, highlighting their impact on trading volumes and market volatility. It explains the self-fulfilling nature of these trades, where buying options can lead to exaggerated market movements. The discussion also covers the high leverage associated with short-dated options and the potential for regulatory intervention. The video concludes with projections on future market trends and the challenges of interpreting market signals due to amplified volatility.

What is one of the main reasons for the increase in market volumes due to short-dated options?

• They are less risky than traditional options.

• They are regulated by the government.

• They allow for daily expiration, attracting more traders.

• They are only available for single stocks.

How do short-dated options contribute to exaggerated price movements?

• By stabilizing the market.

• By increasing the number of available stocks.

• By forcing sellers to buy underlying assets as prices rise.

• By reducing the number of available stocks.

Why is the VIX considered irrelevant in the context of short-dated options?

• It only calculates options with longer expiration dates.

• It is not used by institutional traders.

• It is only applicable to futures trading.

• It is outdated and no longer in use.

What is the leverage equivalent of short-dated options compared to traditional options?

• Non-existent, as they are not leveraged.

• Lower, around two to one.

• Higher, potentially in the hundreds to one.

• Similar to traditional options.

What is a potential risk associated with the high leverage of short-dated options?

• Guaranteed profits for all traders.

• Reduced trading volumes.

• Significant financial losses for incorrect predictions.

• Increased market stability.

How do algorithms affect market liquidity in the context of short-dated options?

• They have no effect on liquidity.

• They increase liquidity by adding more trades.

• They decrease liquidity by shutting off when losing money.

• They stabilize liquidity by balancing trades.

What might trigger regulatory attention in the current trading environment?

• A decrease in trading volumes.

• Stable market conditions.

• A significant unexplained market downturn.

• A consistent upward trend in the market.