Options work like insurance: you pay a small premium for the chance at 300-400% returns. After the 1987 crash and dot-com bust, major institutions like pension funds and endowments started using them to hedge. Zero-DTE options let traders and funds adapt to fast-moving markets with ultra-short-term contracts.
Every trader should know about this. In a nutshell, options is like insurance. What's happening is institutions like pension funds, endowments, mutual funds, after 1987, when the market went down 22% in one single day. From that moment on, the market started to realize they need to hedge their portfolios. Then we had the dot-com crash when all these big guys say, we need to hedge, we need to use options. So people were trading those options to find protection. That was a great product to actually speculate in the market because it has an asymmetry. You pay a small premium and you can take 300%, 400% return.
Well, having the option of zero DTE allows the funds, allows even everyday people to be able to hedge and be able to maneuver a lot faster, which is necessary for the markets of today.
