The options market is currently buzzing with anticipation, as traders and analysts believe that a significant event could be on the horizon — one that might set the stage for a turning point in the stock market. A key development that’s catching attention is the growing influence of zero-day options, particularly around earnings reports, which are expected to trigger substantial moves in the stock market.

Options traders are gearing up for major price swings in individual stocks, with predictions that the S&P 500 stocks could see an average movement of 4.7% — either up or down — when companies release their earnings results. This forecast is notable for its magnitude, marking what could be the largest earnings-day movements on record. With such dramatic expectations, it’s clear that traders are preparing for high volatility.

One of the key factors driving this volatility is the surge in zero-day options. These short-dated options, which have a very brief expiration window, have surged in popularity over the past few years. Today, they account for nearly 43% of all S&P 500 options volume, a stark increase from just 6% in 2017. These options provide traders with a powerful tool to make targeted bets around specific events, such as earnings reports, economic data releases, or key monetary policy decisions.

But while zero-day options offer exciting opportunities, they also come with risks. The rapid rise in their usage has raised concerns about the potential for increased market volatility. With so many traders taking positions with short-term horizons, the impact on stock prices could be swift and dramatic.

As the options market continues to evolve and grow, it’s clear that upcoming earnings events will be pivotal moments to watch. The market is on edge, and how traders react to these developments could determine whether this is indeed a turning point for stocks.