Since 2025, trading in zero-day-to-expiration (0-DTE) options has soared. In June the average daily volume of 0-DTE contracts on the S&P 500 index (SPX) hit a record 2.2 million contracts. Total SPX options averaged about 3.7 million contracts a day, and retail traders accounted for more than half of that figure. These same-day derivatives are rapidly reshaping the options market and testing traders’ speed and discipline.

What exactly is a 0-DTE option? — Expiration is today

A 0-DTE option expires before the closing bell on the very day it is traded. Any option becomes 0-DTE on its final trading day, but Cboe has turned “daily expirations” into a standing product, enabling investors to trade 0-DTE contracts on SPX, SPY and a handful of ETFs every session. Holding periods are compressed to hours—or even minutes—and time value (Theta) decays at an almost exponential rate.

Key differences from traditional options

1. 0-DTE contracts differ sharply from longer-dated options in both pricing and risk.With effectively no time remaining, pricing reflects real-time volatility rather than longer-term expectations.

2. Ultra-high Gamma makes the option’s value extremely sensitive to small moves in the underlying, magnifying profit-and-loss swings.

3. Positions exist only intraday, eliminating overnight-gap risk but also removing the chance to let time repair a wrong directional bet, thereby amplifying intraday volatility risk.

4. Because all activity converges on a single expiry, bid–ask spreads are usually narrower than on longer maturities in the same instrument, giving the appearance of lower costs.

Tradable instruments

Index options: SPX and Mini-SPX (XSP) are the busiest contracts, each with roughly 60 percent of volume coming from 0-DTE trades.

ETF options: SPY, QQQ and IWM list same-day expirations Monday through Friday; QQQ was expanded to a “calendar-style” daily listing in mid-2024, adding depth for intraday tech plays.

Futures options: The CME has introduced same-week series on E-mini futures, and 0-DTE contracts already represent about one-third of total E-mini options volume.

Popular trading strategies

1. Long volatility (long straddle or strangle): Bet that realized volatility on major data-release days will exceed implied volatility.

2. Selling time (iron condor, iron fly and other credit spreads): Collect premium from rapid Theta decay, but impose a strict max-loss limit.

3. Gamma scalping: Buy an at-the-money 0-DTE option and hedge frequently in the underlying, using “high Gamma plus high-frequency re-hedging” to capture price discrepancies.

4. Event-driven directional plays: Trade in the direction of the move immediately after events such as FOMC or CPI, following the rule “take profits fast, cut losses faster.”

Discipline and risk controls

Position sizing: Keep any single 0-DTE trade below 2 %–5 % of total capital to avoid losing the entire premium within minutes.

Time stop: Many professional traders exit before 2:30 p.m. ET to mitigate late-day Gamma explosions.

Liquidity traps: Slippage widens during the first five minutes after the open and the last fifteen minutes before the close, so watch for sudden thin markets.

Event filtering: Surprise geopolitical events or other black swans can blow through short-premium positions instantly.

Mindset: A former SEC chair warned that excessive 0-DTE use “borders on gambling”; treat these options as a high-risk tactical tool, not a core allocation.