0DTE Options

In the kaleidoscopic world of stock and options trading, there are few phenomena that have garnered as much attention as the Zero Days to Expiry options, or 0DTEs. With their explosive growth in popularity – rocketing from 5% of SPX® options volume in 2016 to a staggering 50% this August, they’ve ignited imaginations and sparked widespread debate. The question on everyone’s lips: Is the dramatic surge in 0DTEs warping the very fabric of the markets? Let’s delve deep and separate the chaff from the grain. Understanding Gamma Hedging: Before we…

Options are lauded for their versatility, offering investors a broad spectrum of tenors to express their viewpoints. From trading options that expire years into the future, like the SPX® options expiring in 2028, to the more recent phenomenon of zero days to expiration (0DTE), the landscape of options trading has evolved dramatically over time. A Brief History Lesson In 1973, an ambitious exchange began listing call options on a mere 16 stocks. Expirations were initially set quarterly, and as demand grew, monthly expirations became the norm. This meant same-day trading…

Zero Days to Expiration (0DTE, or ZDTE) Options refers to options contracts with no time value left i.e. their expiration date is the next trading day. 0DTE options are typically used by traders who want to take advantage of expected price movements in the underlying asset in the very short term. The price of an option is made up of two components: intrinsic value and time value. Intrinsic value is determined by the difference between the current price of the underlying asset and the strike price of the option. Time…