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Big changes in US stock options like NVIDIA and Tesla on January 26! A step-by-step guide to profiting from end-of-term options using Futubull tools

On January 26, the US options market will undergo a structural shift!$Tesla (TSLA.US)$ 、 $NVIDIA (NVDA.US)$、 $Apple (AAPL.US)$、 $Amazon (AMZN.US)$、 $Meta Platforms (META.US)$、 $Broadcom (AVGO.US)$、 $Alphabet-C (GOOG.US)$、 $Microsoft (MSFT.US)$Top tech giants such as $iShares Bitcoin Trust (IBIT.US)$, will launch 'Monday and Wednesday expiration' options contracts.

This breaks the traditional pattern where individual stock options primarily expired on Fridays, shifting short-term options trading from 'Friday-focused' to 'midweek常态化'. This change will make options trading for these underlying assets more flexible and frequent, further enhancing market liquidity.

For investors, this increases opportunities for short-term hedging and swing trading, but intraday volatility may also become more pronounced, requiring quick adaptation to the new market rhythm.

For more information about this event, you can Click hereview the details.

To seize the edge in end-of-term options trading in this new normal, not only do you need to understand the rules, but you also require a robust toolkit. Next, we will leverage Futubull’s powerful options functionality matrix, covering foundational knowledge, tool application, and practical strategies across three major dimensions to help you efficiently respond and seize opportunities!

1. Core Understanding: What are 'End-of-Life Options'? Where are the key opportunities and risks?

As the name suggests, end-of-life options refer to option contracts nearing their expiration date. In a narrow sense, it specifically refers to contracts expiring on the same day (0DTE), while in a broader sense, it covers all contracts expiring within the week.A core tool for short-term traders to make big gains with small investments.。The core logic of trading them boils down to two words: leverage.

On one hand, this is reflected inExtreme capital efficiency (cheap)The price of an option consists of intrinsic value and time value. As the expiration date approaches, the time value nearly drops to zero, making the option premium extremely cheap. With very little principal, one can control stocks with large market capitalization.

On the other hand, this is reflected inPowerful Gamma explosiveness (fast)：

● Delta determines how much the option price increases when the stock price rises by $1. Gamma is the acceleration of Delta.

● On the expiration day, especially for at-the-money options, the Gamma value becomes extremely high. This means that even a slight fluctuation in stock price can lead to exponential spikes (or crashes) in option prices. This is why we often see the phenomenon where 'a 1% increase in stock price results in a 10x rise in expiring options,' and conversely, 'a 1% drop in stock price could result in a 10x fall in expiring options.'

At the same time, it's important to be mindful of the high liquidity and high-risk attributes of expiring options:

● High Liquidity: Because they can precisely capture short-term fluctuations, expiring options attract a large number of traders to participate, resulting in a high volume of buy/sell orders and tight bid-ask spreads, allowing investors to enter or exit positions more easily and quickly at reasonable prices. This advantage may become more pronounced after new contracts are added on January 26. However, even for highly liquid instruments, liquidity for out-of-the-money options may dry up suddenly during the final hours before market close, potentially preventing closing of positions.

● High Risk: Besides the potential for significant option price swings due to high Gamma values, expiring options also have higher Vega values (sensitivity to implied volatility IV), meaning small changes in IV could magnify losses. Moreover, the time value of expiring options decays exponentially in the last few hours before expiration. If the underlying stock price remains volatile, premiums may quickly go to zero, leading to total loss of principal.

Therefore, trading expiring options requires strict adherence to four lifelines:

● Watch Volume:Volume determines whether you can buy and sell smoothly. Be cautious with contracts where volume hasn't reached the thousands; otherwise, when trying to close positions, there may not be counterparties available, and the bid-ask spread might widen significantly, making it difficult to transact at favorable prices.

● Choose Underlying Assets:Pay more attention to liquid stocks like Tesla and NVIDIA, and be cautious with illiquid ones.

● Control costs:Use minimal cost for maximum returns while being able to bear the risk of total principal loss. For example, single trade losses should not exceed 2% of total capital; surviving is more important than making quick profits.

● Set profit and loss limits:Set stop-loss and take-profit lines, e.g., a stop-loss at 50% (if premium drops by half, cut it), no upper limit on take-profit but sell at least half when doubled. Adjust specific rules according to your risk preference.

2. Futubull Tools Matrix: Streamline the entire process of trading end-of-term options

Futubull offers an [Active End-of-Term Options] section, where you can find all options contracts expiring within the current week.

In addition, you can combine multiple options analysis indicators (such as IV, IV rank, options trading volume, etc.) to quickly filter suitable options contracts.

Step: Market > Options > Active End-of-Term Options > Click to enter list > Filter options

Furthermore,Facing high-leverage, fast-paced end-of-term options, Futubull offers a series of features to help you build a complete closed loop from spotting opportunities, conducting in-depth analysis, to executing trades.Below, let’s break it down phase by phase.

Phase One: Scanning Opportunities, Narrowing Down the Selection Scope

Core Objective: Quickly identify targets with short-term catalysts, sufficient liquidity, and potential trading opportunities.

Feature Path: Market > Options

1) Popular Stocks + Options Rankings + Unusual Options Activity:These features are crucial for capturing capital signals, helping you locate main battlegrounds and follow smart money. For instance:

● A quick glance at popular stocks before the market opens might reveal actively traded options on stocks like Tesla and NVIDIA, narrowing down your focus to specific stock or ETF targets.

● In the options rankings, you can view top options based on trading volume, open interest, implied volatility, and price changes. For example, you can pay attention to contracts with surging trading volumes or open interest, or those with particularly low or high implied volatility, further refining your list of options among your selected stocks/ETFs.

● Through unusual options activity, you can monitor whether large sums of capital (e.g., from institutions or major players) are positioning themselves in short-term options. These activities often signal short-term directional or volatility predictions, further narrowing your focus on specific options. For instance, if you notice several large, same-day expiry call option trades on NVIDIA during market hours, especially when they're aggressively bought, this usually implies that an institution or major player is betting on a short-term one-sided move.

2) Earnings season opportunities:This is crucial for trading options nearing expiration. Around the time of a company’s earnings announcement, stock prices often experience significant volatility, which could present an excellent opportunity to trade short-term options. You can use this feature to get advance notice of companies about to release earnings, along with specific dates, their implied volatility (IV), historical price changes on earnings days, and earnings expectations to assess whether to trade their short-term options before or after the earnings release.

* Let me explain further: although Monday/Wednesday expirations have been added, exchanges have implemented 'exclusion rules.' If the earnings release date for any of these nine major stocks happens to fall on a Monday or Wednesday (for example, Meta and Tesla are expected to report earnings on Wednesday, January 28), the short-term options that would normally be available might be suspended or adjusted for that day. While enjoying the convenience of 0DTE options, traders must pay close attention to the earnings calendar to avoid having their strategies invalidated.

3) Option seller's zone:If you prefer to be an option seller and profit from the rapid time decay of options nearing expiration, this section will prioritize showing options with favorable returns, probabilities of profit, and premiums, while also providing profit/loss analysis. This helps narrow down the range of potential underlying assets you should focus on.

Phase Two: Analyze pricing to uncover additional opportunities

Core Objective: After the initial screening, perform a secondary screening to select the most suitable contract.

Function Path: Individual stock quotes > Options

1) Options Strategy:If you’ve identified a particular stock but aren’t clear yet on the specific options strategy or contracts, this feature can provide inspiration. Simply choose whether you expect the market to rise or fall, along with your target price, and Futubull will automatically generate various options strategies (including specific strike prices and contracts) for your reference, allowing you to quickly see potential profit and loss scenarios.

Function Path: Individual Stock Quotes > Options > Options Strategy

2) Volatility Analysis:IV (Implied Volatility) is a crucial factor in options pricing and helps you determine whether an option is expensive or not. If IV is at a historical low, it means the option price is relatively cheap with a lower cost to buy; if it's at a high level, it may be more suitable to sell the option.

Function Path: Individual Stock Quotes > Options > Options Analysis > Volatility Analysis

3) Greek Letters:This is your risk dashboard. For end-of-term options, pay special attention to Theta (time decay) and Gamma (acceleration of price changes). If you are seeking extreme explosive potential and can bear the corresponding risks, focus on the strike price with the highest Gamma value (usually near the at-the-money level). If you are a buyer, Theta is your enemy, so the lower its value, the better for you; if you are a seller, Theta is your friend. Monitoring it lets you know the time cost of your position.

Function Path: Individual Stock Quotes > Options > Options Chain > Individual Option Target Quotes

4) Options Chain:This is the core battleground for selecting option targets. For example, when you lock in a stock target and some of its option targets, here you can intuitively compare the bid-ask spreads, trading volumes, Greek letters, etc., of different option targets. After balancing liquidity and profit/loss possibilities, choose the contract that suits you.

Function Path: Individual Stock Quotes > Options > Options Chain

Stage Three: Formulate the decision, final verification before executing the trade.

Core Objective: After going through the previous steps, utilize AI tools to conduct an in-depth review of a single contract and use the options pricing calculator to compute appropriate prices, ultimately making a rational trading decision.

1) Individual Option AI Analysis:Consider it as your last line of defense before placing an order. Conduct a multi-dimensional review of the selected contract, perform a quick scan of the chosen contract to understand its potential profit and loss, leverage, risk, etc., and check if there are any factors that might affect your decision that you haven't noticed yet. If so, make timely adjustments while you still can.

Function Path: Stock Quote Page > Options > Options Chain > Individual Option Quote Page

3) Options Pricing Calculator:After finalizing the option contract, you can check the options pricing calculator before the market opens to see the theoretical price of the option based on the current pre-market stock price and volatility.

Function Path: Stock Quote Page > Options > Options Chain > Individual Option Quote Page

In summary, Futubull's options functionality matrix provides a complete toolbox for end-of-term options trading, ranging from macro market scanning to micro-level strategy and contract comparative analysis.

*End-of-term options are high-risk derivatives with extremely rapid time value decay, potentially leading to significant principal loss. All functions mentioned above provide market data and analytical tools designed to assist users in making independent decisions and do not constitute investment advice. Before executing any trades, ensure you fully understand the associated risks and make prudent judgments based on your investment objectives and risk tolerance.

3, The 'either-or' combo order helps you combat emotional decision-making and lock in profits or losses!

Once you've traded in end-of-term options, deciding when to exit becomes another challenge.

"Greed and fear" in investing are infinitely magnified in the trading of end-stage options.This is a race against time: high leverage offers the temptation of doubling your money instantly, but the rapid decay of time value and drying up of liquidity as expiration approaches mean that profits can vanish in the blink of an eye, potentially wiping out your principal. You could be up 50% one hour and down 50% the next.

Time waits for no one, volatility is extreme, and liquidity can disappear in an instant. In this environment, relying on manual monitoring and emotionally driven decisions is akin to gambling.To handle the 'speed, urgency, and risk' of end-of-term options with composure, tools like the either-or combo order are essential.

Using this tool, you can set two automatic safeguards at once: one being an ideal 'take-profit line,' and the other a firm 'stop-loss line.' These can be configured to 'trigger a market order upon activation' to ensure quick execution, avoiding greater losses due to a rapid price drop and failure to execute the trade.

This strategy locks in profit and loss boundaries at the opening of the position, replacing emotions with system automation to eliminate greed and侥幸心理. Secondly, it prioritizes ultra-fast execution speed, ensuring a swift exit via market orders in volatile and rapidly changing liquidity environments. Lastly, it automates execution for you, reducing the pressure of constant monitoring.

*Risk Warning: End-of-term options are inherently high-risk products. Even when using either-or combo orders, the risks brought by sharp fluctuations in the underlying asset cannot be completely offset. It is recommended to control position size and avoid blindly adding leverage. Although executing at market price after triggering ensures speed, it may result in certain slippage losses, especially during times of near expiration and extremely poor liquidity. Avoid setting orders too late to prevent complete loss of end-of-day liquidity, which could lead to order non-execution and ultimately the risk of premium loss.

4, Finally, let’s go over some common strategies for end-of-term options.

End-of-term option strategies don’t need to be complex; their core revolves around 'event-driven, volatility, and time value.'

1) Event-driven directional bets:Before major events like CPI releases or Federal Reserve decisions, predict a one-sided move and then directly buy call or put options expiring within days of the event, aiming to profit from a one-sided trend. The key is: both profits and losses happen quickly; never get greedy, strictly adhere to fast in-and-out discipline.

2) Volatility Trading:When large fluctuations are expected on days like earnings release day but the direction is unclear, you can simultaneously buy call options and put options that expire a few days after the earnings release. These options should have the same expiration date, the same strike price, and the same quantity. As long as the underlying stock price experiences a sufficiently large one-sided movement (whether up or down) before expiration, the profit from one side of the options may cover the cost of both sides and generate a profit.

3) Selling Strategy:If you anticipate that the market will enter a calm consolidation phase, you can earn rental-like income by selling option spreads to capture time decay. For example, you could sell a call spread and a put spread simultaneously to form an iron condor strategy, locking in a range of stock price movement. As long as the stock price stays within your set range at expiration, you get to keep all the premiums collected.

That’s all for today. Did you find the above content helpful? Feel free to leave a comment and share your thoughts and experiences with end-of-term options!

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