It was only a matter of time before a firm listed an ETF/ETP on zero day options. And here it is!
Below are the latest 0DTE offerings listed on the London Stock Exchange:
S&P 500 Options ETP (SPYY)
Nasdaq 100 Options ETP (QQQY)
From the prospectus of Leverage Shares, the listing company:
Strategy
Cash Covered Put
Summary
The Investment Strategy seeks to generate monthly income by selling each day put options on the S&P 500 Index or the SPDR S&P 500 ETF Trust with a Daily Option Expiry and paying a return on the cash held. The ETP Securities aim to harvest yields, while retaining upside exposure to up to the options' Strike Price.
Risks
The cash covered put strategy has capped upside potential equal to the premium collected from selling the put plus any interest earned on cash held.
While the premium income can offset some losses, the underlying stocks can still decline in value, leading to potential capital losses.
Roundhill’s Covered Call Strategy ETF also looks to capitalize on 0DTE popularity. The covered call strategy combines a long position in the Nasdaq-100 Index (“NDX”) with a short position in NDX 0DTE call options. But if the index drops more than the premium received from selling the call option, the covered call strategy begins to lose money. And investors miss out of potential profits from index price increases.
One benefit to selling 0DTE options is to collect a higher premium (volatility) due to market mis-pricing.
This post is NOT an endorsement of either product! Besides everything, what can possibly go wrong with selling naked 0DTE puts on the S&P500?
DISCLAIMER
All Options Tree AI materials, information, and presentations are for educational purposes only and should not be considered specific investment advice nor recommendations. Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one's financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading.