- Bloomberg – What Are Zero-Day Stock Options? Why Do They Matter?
An option is a contract that gives its owner the right, but not the obligation, to buy or sell a specific amount of an underlying asset at an agreed-upon price, known as the strike price, and on a specific date. A call contract gives the owner the right to buy the asset and a put gives the right to sell it. Both kinds of derivatives are purchased by paying a premium that is generally far less than the cost of the underlying asset. If the asset’s price doesn’t move in a way that makes executing the contract worthwhile, the option expires. Expiry times can vary from days to months. 0DTE options refer to those that have a shelf life of no more than 24 hours.