Zero-Day Options Accelerate Turmoil on Wall Street Amid Tariff Turbulence
New York, Tuesday, 15 April 2025.
The surge in zero-day options has led to a record 8.5 million trades, intensifying market volatility amid tariffs. Last week’s S&P 500 intraday volatility hit levels unseen since 2008.
Zero-Day Options Surge Amid Market Volatility
The rise in zero-day options trading has caught investor attention as it has significantly amplified the volatility on Wall Street. As of April 2025, the trading volume of these options, particularly those tied to the S&P 500, has skyrocketed to 8.5 million—marking a 23% increase since January 2025. This surge accounts for approximately 7% of the total options market volume in the United States. Financial experts like Jeff Kilburg, CEO and CIO of KKM Financial, note that the market’s current state, driven by zero-day options, exhibits a level of volatility unseen in years, not even during the heights experienced in 2020 or the 2008 financial crisis [1].
Impact of Tariff Policies on Market Dynamics
Compounding the market’s chaotic nature are the recent tariff policies implemented by former President Donald Trump. These policies included sweeping tariffs on key U.S. trade partners, which have subsequently led to a series of volatile shifts in the markets. On April 12, 2025, Trump announced a pause on these tariffs and introduced a temporary waiver for certain electronics. This announcement followed a period marked by drastic market movements, with a spike in call options activity raising concerns of insider trading and market manipulation, prompting calls for an SEC investigation [2][3]. The tariff-induced uncertainty has deeply unsettled both investors and CEOs alike, with 62% of U.S. CEOs fearing a recession within six months [3].
Institutional and Retail Investors Active in Zero-Day Options
As the financial landscape shifts, both institutional and retail investors have increasingly turned to zero-day options as tools either for speculation or risk mitigation. Online platforms, notably Robinhood, have made such options more accessible to retail traders, providing them tools once exclusive to institutional investors [1]. Experts like Maxwell Grinacoff from UBS highlight that while zero-day options contribute to heightened intraday volatility, this activity does not always reflect in closing prices. As these trading activities intensify, concerns about market stability and investor safety amid such high volatility continue to grow, prompting institutional reassurances from entities like the New York Stock Exchange [1][4].
Market Stabilization Efforts
Amidst these challenges, the NYSE has worked to reassure investors about the structural integrity and resilience of the U.S. market infrastructure. NYSE President Lynn Martin confirmed that the systems are robustly handling the increased trading volumes more efficiently than during past times of market stress, such as the COVID-19 market crash [4]. Despite reassurances, there remains a tangible sense of vigilance among investors as the combined forces of unpredictable tariff policies and zero-day options continue to drive daily market swings.