Exchanges like Cboe Global Markets Inc (BATS:CBOE) have introduced daily expiry options, often called 0 DTE, which offer investors exposure to increased profit potential at a lower cost.
The use of these 0 DTE options has exploded; options expiring in 24 hours or less now account for a steadily increasing share of the total volume in the cash-settled S&P 500.
“We’ve seen the onset of this new phenomenon over the last six to eight months as investors look for the next big opportunity,” TradeZero’s co-founder and CEO Dan Pipitone explained in a call with Benzinga.
“0 DTE options offer our clients a high risk-to-reward which is alluring since you can risk less to make more potentially. This also comes with many risks as options can and will expire worthless, and that risk is ever greater on the expiration day.”
Consequently, 2023 is off to a far better start for TradeZero, Pipitone says. His clients are getting a better feel for macro headwinds, and with tools like 0 DTE, they can express and change their opinions faster.
“The recent volatility that the banking sector has experienced has created some tailwinds for the active trader,” Pipitone adds. “There is going to be a massive trickle down from that, and I am proud that we’re on the right side regarding customer service, as well as our technology and asset offering. We are weathering the storm in a way some others have not.”
Regulation And Expansion
Post-pandemic, brokers learned some big lessons. There was the GameStop Corp. (NYSE:GME) and meme stock debacle, as well as the 2022 market decline.
In not having the ability to trade from the short side at TradeZero competitors, investors may have found it hard to pivot and recoup losses. Separately, some investors have left markets entirely following disappointments, including the failure of FTX.
“We want to provide new and existing customers a safe environment to build their financial nest egg,” Pipitone says. “We’re opening our retail operation in Canada and expect to be operating in Europe and the UK, too. We’re going the extra mile to check the regulatory boxes and build a support infrastructure that communicates in a very localized fashion.”
For the first time in a while, clients care a lot about their financial institutions’ registrations, how the regulations work, and the protections they are afforded. That’s why TradeZero emphasizes its regulatory status in its Canada advertising, Pipitone adds.
“It’s what people need to hear. We’re yelling from the mountaintops that we are regulated.”
See Also: U.S. Financial Stocks Plummet On Fears of Contagion After Deutsche Bank Selloff
Why TradeZero, Not Others?
On the one hand, it is customer service, trading experience and technology.
“When you have a question, you can pick up the phone, or go on the website, and get answers in a real-time fashion, 24/7,” Pipitone elaborated, noting that clients can even get in touch with TradeZero brokers to fill orders and get a better understanding of market conditions.
“Also, you can go long or short at any time from 4 a.m. to 8 p.m., as well as have the flexibility to pick and trade from four different platforms, including our institutional grade ZeroPro, the likes of what you may see at the trading desks of a hedge fund or clearing house.”
On the other, it is a commitment to always do right by the clients.
“The transition to T+1 and instant settlement will coincide with us building out our technology stacks and supporting technologies,” Pipitone said. “We fund trades for two days, and capital is tied up. When the transitions happen, capital requirements and constraints on firms like ours will be much less,” and the savings could be passed down to clients.
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Photo: Courtesy TradeZero
