Make Your Move on CBOE (Here’s Why)
The timing on this trade is critical – which is why you want to make your move now.
Here’s the situation (and its fascinating origin story)…
The Chicago Board Options Exchange, or CBOE, was founded in 1973 in the smoking lounge at the Chicago Board of Trade.
Over the last five decades, the growth in options trading volume has been truly explosive.
Check out these stats…
Just 23 years ago, it was eye-popping if 1 million options contracts were traded on any given day.
But now, just two decades later, it’s commonplace to see 45 million contracts traded during any given trading session.
That’s explosive growth.
But as remarkable as that seems, I truly believe that options trading is still in the heart of its growth phase – especially now that “zero days to expiration,” or 0DTE, options are exploding in popularity.
If you have yet to hear about these, allow me to quote a Barron’s article from last week to quickly catch you up…
Zero-Dated Options Are Hot – but Not Hazardous
Barron’s, February 23, 2023
A seemingly new product has options markets buzzing. So-called Zero Days to Expiration, or “0DTE,” options, have spurred historic trading volumes alongside a wave of concerned commentary. Any financial innovation brings a rightful share of concerns, but these new contracts are evolutionary, not revolutionary. It’s more like the casinos opened a new set of tables rather than introduced truly new games. Remember, every option eventually becomes zero-dated on expiration day. What differs is the frequency of expirations, not the expirations themselves.
Weekly expirations were first listed in 2005, and there have been thrice-weekly expiries in leading index and exchange-traded-fund options since 2016. It was inevitable that Tuesdays and Thursdays would be added to the mix, creating a full slate of daily expirations.
When the CBOE Options Exchange announced its intention to fill in the expiration calendar, it acknowledged that as of last February, 46% of options volume was made up of contracts expiring in five days or less. The trend toward ever-shorter options has been under way for quite some time. There is nothing specifically dangerous or systemically risky about 0DTE options, even if they have facilitated potentially unhealthy levels of aggressive speculation.
The new daily expirations made little stir when first listed last April, yet have recently become a sensation. The reason is surprisingly simple. Markets were falling throughout most of 2022 but have been rallying sharply for most of this year. Speculators are more active when markets rise, and they adopted the new tools available to them. 0DTE options are simply the newest way to make options trading more accessible – nothing more, nothing less.
YOUR ACTION PLAN
To me, this makes an even stronger case to own or trade CBOE Global Markets (BATS: CBOE). These new 0DTE options are adding to the options trading volumes, which only helps CBOE rake in more trading commissions. Plus, add into the mix the 50-year anniversary celebration on April 26, and this could generate even more interest and curiosity about options trading – which could lead to an upside trigger catalyst for CBOE. Therefore, as we approach late April, the time to get positioned in CBOE is now.
NOTE: Inside The War Room, we’ve already been making money off this play, hitting winners of 13.56% and 25% trading CBOE over the last week.
If you’d like to enter our real-time trading room and start hitting these winners alongside other War Room members, then you’re invited to join us HERE.
MONDAY MARKET MINUTE
- Is Big Tech Still Carrying the Markets? The short answer is yes. FAANG + MNT stocks – which consist of big companies like Meta Platforms (META), Apple (AAPL) and Amazon (AMZN) – have accounted for 3.05 percentage points of the 3.81% advance in the S&P 500 this calendar year. In other words, they’re responsible for 80% of the index’s gains. Tracking.
- Maybe It’s Upward Dog for This Yoga Pants Company. Shares of Lululemon (LULU) have been stuck between $300 and $330 since the start of the calendar year, but as the weather improves, we could see a breakout.
- Inflation Picking Up. With recent season-adjusted data showing a flare in prices in January, we took a winner on a DIA put trade today… and we’re looking to reload if needed.
- Broadmark Realty Capital Gets a Premarket Boost. The nationwide real estate firm was up 19% this morning after it entered into a definitive merger agreement pursuant to which Broadmark will merge with Ready Capital.