Author: anymose, a softcore science popularizer

Science popularization: What is zero-day options

Everyone loves to hear stories of sudden wealth; while indulging their curiosity, they also want to study whether they can replicate the success, or at least try their luck. The reality might be disappointing; the person who emerged from Byte may not be a genius, but an ordinary individual among countless survivor biases.

To understand how he became wealthy, we need to discuss this tool called zero-day options.

Let's dive in!

There are many versions of the story about how he became wealthy, similar but different; they all involve accumulating capital through small investments and high odds before diversifying investments. I saw one version that said he borrowed money in the early days to buy zero-day options, getting it right several times, transforming a $20,000 capital into millions. Is this true? Theoretically, it is indeed possible.

He used this financial tool called zero-day options.

Zero-Day Options 0DTE / Zero Days to Expiration, also known as 0DTE options or zero date options, represent a highly risky near-gambling approach in options trading, betting on the situation of the exercise day or nearby days at a low price.

Typically, you can buy or sell zero-day options. For example, if Intel's stock price is $104, buying a call option with a strike price of $105 has a very low premium. If the stock price skyrockets to over $110 that day, the option might easily multiply several times or even a dozen times. Note that the typical characteristic of zero-day options is the rapid decay of time value, which can even disappear abruptly.

In simple terms, zero-day options are your bet on the rise or fall of a certain option on its expiration date months later. In zero-day options trading, you can buy in at an extremely low price but must bear the high risk of losing all your capital, with no chance of recovery; long-term options have time hedging or adjustment opportunities, but with zero-day options, if your direction is wrong, you're back to zero.

This is very much like binary options with added time and capital leverage; in many countries, binary options are illegal and directly defined as gambling. Betting on direction + high leverage + time limit + high probability of going to zero: that’s the characteristic. From one angle, zero-day options are also very similar to lotteries, perhaps not coincidentally, the protagonist of the Byte story unexpectedly handles the name @leto_Bao, and Leto means lottery. (Related Reading:The main character in the Byte stock trading windfall of 30 million resigns: I bought a hard disk on Pinduoduo, unexpectedly got to storage? How can ordinary people capture "the information around them" for trading?)

He relied on borrowing $20,000 multiple times predicting zero-day options to turn it into over $2 million; theoretically, this holds true but only in theory. This is completely non-reproducible, so don’t get tempted to try; achieving success comes at the cost of thousands. You cannot replicate his success, and don’t even think about copying it.

So, can zero-day options really not be touched at all?

Yes, from my trading risk perspective, absolutely do not touch it. However, there will always be those who don't believe in evil and think they are great. My personal suggestion is to first learn what zero-day options are, then try with small funds; remember, even if you succeed with small funds, it does not mean you will succeed with large funds.

Looking back, we can analyze a case. Last time, Micron was actually a very good practice for zero-day options. If we look back, if you could have sold wildly the day before the earnings report and then bought in massively the next day, my goodness, you could have bought all of Micron.

Financial tools are just tools; they have no feelings, they freely choose to be loved by those who love them, and everyone ends up suffering together. Investment has risks; the risk lies in whether you can understand these tools first. This article serves as a preliminary introduction; just enjoy the spectacle. Are you really going to pay to learn how to gamble? Just flip a coin instead.

Good luck to us!

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