We’ve covered in the past how adding additional expirations in options markets increases overall liquidity, allowing for investors to easily customize, hedge and roll their positions across expiry cycles. However, for the majority of symbols, there is only one options expiry per month.
In 2023, five ETFs covering a diverse asset base (representing gold, silver, rates, oil and natural gas) had additional Wednesday expiries added. Then, in 2024, the ETFs representing gold, silver and treasury rates expanded to Monday expiries as well.
Today, we’ll put our theories to the test by looking at these symbols that now expire multiple times throughout the week and see what that does for their liquidity profiles.
Expiries are volume-additive, not cannibalistic
One potential concern with listing additional expiries is that they might just fragment liquidity, taking volumes from the existing expiry and redistributing positions away from the Friday expiry and into the new ones.
However, when midweek expiries were introduced, total volumes increased rather than being redistributed. Even volumes in the existing Friday expiry increased. Traders are now able to more precisely take positions around specific events, like economic or commodity data, without carrying exposure for days longer than necessary. And that brings new trading interest- not just slicing the same activity thinner.
Chart 1: Listing more expiries adds volume to the ecosystem
More strikes mean more open positions
Another way to measure the usefulness of adding expiries is by looking at open interest. Because open interest measures the total number of open positions at the end of a trading day, if investors are simply trading on the same day as expiry, open interest won’t change much. But if the new expiries help with hedging or structured trades, we should expect open interest to rise.
Across all five symbols, open interest increased following the listing of midweek expiries. That’s a sign that investors are rolling their positions across expiries and using them for strategies that span multiple days or weeks – not just trading them on the day of expiry.
Chart 2: Open interest in weekly options increased after new expiries were listed
The volume distribution is the same, there are just more expiries now
The rapid growth of trading on the day of expiry (so-called “0DTE”) has raised concerns about market stability- and some worry that adding more expiries to the mix could increase the relative share of this trading, amplifying volatility.
But in this case, that didn’t happen.
Although total volume rose, the percentage of volume made up by 0DTE trades remained fairly stable. That suggests the new expiries are being used across different types of time horizons- not just for the short-dated trades.
Chart 3: The distribution of volumes across an option’s lifespan is constant, there are just more expiries now
Why this matters
The data tells a consistent story. Listing new expiries throughout the week:
- Increases volume in those symbols.
- Drives open interest higher.
- Does not significantly change 0DTE share.
This suggests that the new expiries are filling a gap for investors, allowing them to customize their positions more precisely without distorting the quality of the market.