An interesting read on ODTE options (4 min read). https://www.nasdaq.com/articles/analyzing-expiry-date-options-trading
The writerling there uses a questionable logic when he writes: "Expiry date volumes have increased because there are more expiry dates." IMO an illogical statement/conclusion.
Could you dare to elaborate why it seems to be illogical to you? Could you enlighten us of your option trading expertise?
i think what he means is that more expiration days and hence more trading volumes, in a sort of circular logic.
My father was a trader on the floor of the CBOE in the 1970s, when options trading was first introduced. At the beginning, there were only call options--no puts. And there were no index options--only equities. And you could only trade options on 16 stocks. And there were only four expiration dates each year. I'm not kidding. Options expired on the third Friday of the month, in January, April, July and October. That was it. If you increase the number of days on which options expire, you're going to see an increase in the volume of trading on expiration days. That's not illogical.
@BMK, the current situation (2021+) is not comparable to the 1970ies. I doubt the author can prove the statement with real numbers. As said, IMO BS logic b/c of finiteness of funds... If say previously all funds were in use, then now after adding more exp dates, then where from has the funds to come to have increased volumes for each and all? Rather the opposite is to expect: decreased volumes for each b/c now the finite funds are to be shared among many more... That's basic logic & simple maths...
I think there are some studies and concrete data which clearly show that both retail investors and institutions are pouring more money into options, especially in the last three years.
A visual I've come across in regard to 0dte and the previous mentioned Volmageddon. Looking to update this in a "Fed increasing Rates" market cycle. Source
Look no further, a friend is pouring down $500 a day to buy spx call every day, currently he is on a winning streak. That's gambling I reckon, no expected returns. I remember my professor used to say, gambling is when you don't have expected returns, while investment is that you do.