The world of options trading, once a domain for seasoned professionals hedging their portfolios, has become a thriving market for high-risk, high-reward bets. With 49 million options contracts traded daily in 2024—a 10% increase from 2023—this trend marks the fifth consecutive year of record-breaking growth, according to data from the Options Clearing Corporation (OCC).
Retail Traders Fuel Market Boom
“It’s really the phenomenon of the retail trader that continues to just drive this growth,” said Catherine Clay, head of global derivatives at Cboe Global Markets. Fueled by rate cuts from the Federal Reserve and Donald Trump’s re-election rallying speculative assets like bitcoin, amateur investors are flocking to options trading as a way to amplify their bets.
Options, which give traders the right to buy or sell shares at a predetermined price by a set date, have seen their appeal grow among novice traders. These contracts, which can expire within months, days, or even hours, offer the potential for massive payouts—or devastating losses.
Zero-Day Options Dominate Activity
A significant portion of the trading boom comes from zero-day-to-expiry options, or “0dte” trades. These contracts, expiring within a day, now account for more than half of the options activity tied to the S&P 500 index, up from just 17% in early 2020, according to market researcher SpotGamma.
Industry executives are exploring the possibility of extending zero-day trading to individual stocks, a move that could further expand this high-stakes market.
Single-Stock Options in the Spotlight
Single-stock options trading rose by 15% in 2024, outpacing the growth of index options and exchange-traded fund (ETF) products. Nvidia emerged as the most popular stock for options trading, overtaking Tesla, with its shares experiencing volatile swings around earnings reports.
San Diego-based sales professional Viviane Mason exemplifies the thrills and perils of this market. She netted $54,000 trading Nvidia call options before earnings but later lost $29,000 on Meta Platforms call options, which expired worthless. “It’s not for the faint of the heart,” Mason said. “Not everyone has the guts of losing $20,000 one day and starting all over the next.”
Crypto Options See Explosive Growth
Crypto-related options surged after Trump’s re-election and the debut of options on spot bitcoin ETFs. Activity has also spiked around companies like MicroStrategy, whose shares skyrocketed over 350% in 2024. Popular trades tied to MicroStrategy range from bets on its stock plummeting to $250 to soaring as high as $425.
Analysts Warn of Market Risks
While bullish trading drove much of 2024’s activity—coinciding with a 23% climb in the S&P 500—concerns are growing about the potential for a violent market correction. “If there is a market correction, I think it could be pretty violent. That could really still keep options volumes very elevated,” said Brent Kochuba, founder of SpotGamma.
As 2025 begins, the fever pitch of options trading shows no signs of slowing, underscoring its allure for thrill-seeking investors and the inherent risks of the market.
