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Wall Street’s Hot Options Come to Europe. Will They Take Off?

(Bloomberg) — The zero-day options trade that has taken Wall Street by storm will finally arrive in Europe next week, in a fresh test for the region’s long-struggling capital markets.Most Read from BloombergSpaceX Blast Left Officials in Disbelief Over Environmental DamagePowell Has Bond Traders Right Where He Wants Them: Full of DoubtUS Marines Taken From Darwin Military Helicopter Crash: ReportsFIFA Suspends Spanish Football Chief Over World Cup KissTesla Investors to Get $12,000 Each From Mu Starting Monday, Deutsche Boerse AG’s Eurex will list Euro Stoxx 50 (SX5E) derivatives that expire every weekday, following US peers who introduced the now-booming contracts tied to the S&P 500 last year.

Every trading session, investors in Europe will be able to buy and sell derivatives expiring the same day, known as zero-days-to-expiration contracts, or 0DTE.

Their introduction unleashed a torrent of trading activity on the other side of the Atlantic, as retail and institutional investors used them as a tool for speculation and hedging. At one point this month 0DTE accounted for a record 55% of the trading volume for options tied to the S&P 500, according to data compiled by Nomura Securities International. The derivatives have grown so popular that some now fear they’re swaying America’s benchmark equity gauge itself.

In Europe, the level of demand for the contracts will be closely watched by participants looking for signs of life in the moribund market. But amid the chronic underperformance of equity benchmarks, dwindling stock listings and stagnant volumes, the options face an uphill battle to have an impact.

Source: Head Topics