Miami-based ETF sponsor Defiance has launched the first Nasdaq-listed exchange-traded fund dealing in zero-day options, duly called the ‘Defiance Nasdaq-100 Enhanced Option Income ETF’.
Under the ticket symbol QQQY, Defiance’s new ETF will track the Nasdaq 100 with the aim of generating daily income for fund investors by selling put options.
"We're thrilled to introduce QQQY to the market. The daily notional trading value of 0DTE options has skyrocketed to about $1 trillion," Defiance's chief executive officer Sylvia Jablonski said in a press statement.
According to the fund’s prospectus, QQQY will hold short-term U.S. Treasury securities as collateral for the options, and to generate income.
Investors will pay 0.99% of the value of their investment as management fees.
The launch of Defiance’s ETF comes amid an explosion of interest in zero-day option trading.
The Chicago Board Options Exchange estimated a daily deal flow of half a trillion dollars (whereas Defiance believes the number is closer to $1 trillion).
Jonathan Zaionz, Cboe’s senior derivatives analyst, estimated that 0DTEs have accounted for 43% of all S&P volumes in 2023, with 30% to 40% spearheaded by retail investors.
This August (a record month for 0DTE deal flow), Goldman Sachs (NYSE:GS) contended that a wave of 0DTE puts caused a 0.4% drop in the S&P 500 in a 20-minute period.