How "0DTE" Options Will Cause the Next Black Monday

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On October 12, 1987, a week before Black Monday, the Wall Street Journal warned of the potential for market instability. Per the article: The use of portfolio insurance "could snowball into a stunning rout for stocks."

I am increasingly alarmed that a trading tool similar to portfolio insurance will set markets up for a stunning display of market instability.

Despite the potential to foster market instability, 0DTE is a term few investors have heard of.

Zero days to options expiration(0DTEs) are puts and calls on individual stocks and indexes that expire within 24 hours. 0DTE options may seem like speculative you only live once (YOLO) bets at first glance. But, when one appreciates how brokers hedge options, they then grasp the potential for considerable instability in individual stocks and the market.

Before exploring 0DTE options, it's worth briefly discussing portfolio insurance's role in Black Monday 1987.