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A Risky Trading Strategy Is Growing in Popularity in 2022's Wild Market

  • Explosion in short-dated options seen sowing seeds for trouble
  • Traders forced to adjust game plans amid intraday volatility
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It happens in a flash: The S&P 500 turns on a dime, and piranha-like options traders pile into short-dated contracts in a dash to harvest a quick advantage. 

Tuesday reprised a pattern that has been visible for months. As the S&P 500 reversed a 1% gain in a violent session right before the Federal Reserve meeting, the turbulence fed a trading frenzy in options that expire within the next 24 hours. Such contracts dominated the ranks of the most traded, making up half of the index’s total volume.