0DTE Options Surge: What Traders Need to Know About Same-Day Expiration Contracts

0DTE trading has exploded in popularity over the past few years, attracting both seasoned investors and curious newcomers to options markets. But what exactly is driving this phenomenon, and is 0DTE trading right for you? Let’s dive into the mechanics, opportunities, and risks of these high-speed derivatives.

Understanding 0DTE: The Mechanics of Same-Day Expiration

A 0DTE option—short for Zero Days To Expiration—is an options contract that expires at the close of the current trading day. Unlike traditional options that might expire weeks or months into the future, 0DTE contracts compress all of their value into a single trading session. This means your profit or loss is entirely dependent on how the underlying asset moves before the market closes.

The appeal is straightforward: 0DTE options are priced based purely on intraday price action. There’s no overnight risk, no weekend gap-risk, and no waiting around for a thesis to play out over weeks. For traders who thrive on quick decision-making and rapid execution, this compressed timeframe creates unique opportunities that traditional options simply cannot match.

The 0DTE Explosion: From Weekly Concept to Daily Reality

The story of 0DTE options is relatively recent. Back in 2005, the Chicago Board Options Exchange (CBOE) introduced weekly options, allowing investors to trade contracts expiring once per week. Shortly after, Monday and Wednesday expirations were added to the mix. But the real turning point came in 2022, when the CBOE began listing 0DTE contracts on the S&P 500 Index (SPX) and the SPDR S&P 500 ETF Trust (SPY) for all five trading days of the week.

This expansion changed everything. Since 0DTE options became available daily, their volume has skyrocketed. According to Goldman Sachs research, 0DTE trades now account for nearly half of all trading volume on the SPX. That’s a remarkable shift in how market participants approach derivatives trading.

Which Markets Offer 0DTE Options?

In theory, every optionable stock has 0DTE contracts available at least once per month. In practice, however, the most actively traded 0DTE options are concentrated on the SPX. The reason is simple: liquidity. The SPX offers 0DTE contracts every trading day and attracts massive volume, which means tight bid-ask spreads and quick order fills. Individual stocks with weekly options have 0DTE expirations once a week, and those with only monthly options have them once a month—but the liquidity pales in comparison to the index.

This liquidity advantage is crucial. When you trade less-liquid 0DTE contracts on individual stocks, you’ll encounter wider spreads, slippage on large orders, and slower order fills. The SPX’s daily availability and deep liquidity make it the preferred playground for most 0DTE traders.

Who Can Trade 0DTE? Account Requirements and the PDT Rule

Before you jump into 0DTE trading, you need to understand a critical regulatory constraint: the Pattern Day Trader (PDT) rule. If you open and close a 0DTE option on the same day, it counts as a day trade. To avoid running afoul of the PDT rule—which prohibits more than three day trades in five trading days for accounts under $25,000—you’ll need sufficient capital in your account.

Here’s the key distinction: if you buy or sell a 0DTE option and let it expire, that action does not count as a day trade. But if you actively manage your position by closing it before expiration, you’re triggering a round-trip transaction that counts as a day trade.

This distinction matters enormously for risk management. If your account can’t accommodate day-trading activity, entering 0DTE trades puts you in a precarious position. You won’t be able to cut losses quickly if the trade moves against you, leaving you exposed to the remaining intraday volatility. This is why many traders maintain larger accounts specifically for 0DTE strategies.

Three Key Reasons Traders Are Flocking to 0DTE

Explosive Profit Opportunities

0DTE contracts offer substantial profit potential if you correctly predict short-term price movements. Because these options expire the same day, astute traders can capture gains from intraday volatility without holding overnight risk. A small move in the underlying can translate into outsized percentage gains on a 0DTE contract, especially those trading out-of-the-money (OTM).

Tight Execution and High Liquidity

The high trading volume in 0DTE markets—particularly on the SPX—ensures that bid-ask spreads remain tight and competitive. This tight liquidity means you can enter and exit positions at predictable prices without suffering significant slippage. For active traders, this efficiency is transformative compared to illiquid options markets.

Adaptability and Frequency

Since 0DTE options are available every single trading day, you have maximum flexibility in your trading calendar. You’re not locked into waiting for the third Friday of each month or the next weekly expiration. This daily availability lets you respond nimbly to earnings announcements, Fed decisions, economic data releases, and other market-moving events. You can adjust your positions based on real-time market conditions rather than being forced to hold through overnight or weekend gaps.

Navigating 0DTE Risk: What Every Trader Should Know

The 0DTE opportunity comes with genuine downsides that deserve serious attention. First, the compressed timeframe means the market can swing wildly in a single session. You might establish a position, watch it move significantly against you during the day, and still face substantial unrealized losses even if the option ultimately expires worthless (in the case of OTM short positions).

Second, 0DTE trading demands active management and a willingness to make quick decisions. You can’t simply “set it and forget it” like you might with longer-dated options. Market conditions can shift rapidly, forcing you to adjust your hedges, close losing trades, or take profits ahead of expiration. This requires both skill and emotional discipline.

Finally, the capital requirements and PDT constraints mean 0DTE trading isn’t accessible to everyone. If you have a smaller account, the inability to exit a losing position quickly without violating day-trade limits creates real risk.

Mastering 0DTE: Core Trading Strategies Explained

Most successful 0DTE traders employ one of two foundational approaches: scalping for quick profits or selling premium (collecting income from theta decay). Selling 0DTE options has become increasingly popular because any option that ends up out-of-the-money (OTM) at expiration will expire worthless, giving sellers a win. Since 0DTE options decay aggressively on the day of expiration, this creates what traders call a “high win-rate” setup. However, the reality check is important: even if your prediction is correct and the option expires worthless, market volatility during the day can generate steep unrealized losses that test your conviction and capital reserves.

Iron Condor: Building Your First 0DTE Income Strategy

The iron condor is a signature 0DTE strategy. Here’s how it works: you simultaneously sell a put credit spread (selling a put at one strike and buying a put at a lower strike) and a call credit spread (selling a call at one strike and buying a call at a higher strike). This two-part structure creates a range-bound position: you profit if the underlying asset stays within your defined range by expiration.

The beauty of the iron condor is its probability of profit. As long as the underlying doesn’t move outside your range, both sides expire worthless and you keep the premium. Your maximum loss is defined upfront—it’s simply the width between your strike prices minus the credit you received.

For example, if you sell a 5-point-wide iron condor and collect $200 in total premium, your maximum loss is $300 ($500 width minus $200 credit collected). The trade is profitable as long as the underlying stays within range. The challenge? In 0DTE markets, the underlying can shift dramatically during the day, forcing you to actively adjust your position, reduce your risk, or cut losses entirely. Passive management doesn’t work in 0DTE iron condors.

Iron Butterfly: Capturing Premium in 0DTE Markets

The iron butterfly is another sophisticated 0DTE strategy suited for traders with medium-term conviction on price stability and neutral market outlook. Here’s the structure: you sell an at-the-money (ATM) call and an at-the-money (ATM) put simultaneously, creating a short straddle. You then hedge this by buying further out-of-the-money (OTM) call and put options at higher strike prices. This creates defined risk: your maximum loss is the width of your strikes minus the premium collected.

A 5-point-wide iron butterfly might generate $400-500 in premium, but your maximum loss is still just $500 minus that credit. The advantage? You’re selling expensive ATM options rather than cheaper OTM options, so you collect more premium upfront. Many traders feel comfortable holding iron butterflies until expiration or closing them when they’ve captured 25-50% of the maximum profit, since the defined risk is relatively modest.

The 0DTE Trading Edge: Final Thoughts

0DTE options represent a genuine innovation in how traders access short-term volatility and income-generation strategies. The daily availability, tight liquidity, and explosive profit potential have transformed 0DTE from a niche product into a central pillar of modern options trading. The data speaks for itself—0DTE contracts now dominate trading volume on the SPX.

But opportunity and risk are two sides of the same coin. 0DTE trading demands an account with sufficient capital to handle day-trading constraints, emotional discipline to manage positions actively, and a deep understanding of how theta decay, gamma, and intraday volatility interact. If you have the capital, experience, and risk management framework in place, 0DTE options can unlock powerful trading edges. If you don’t, these same contracts can become a fast path to significant losses.

Start small, understand your account constraints under the PDT rule, master one strategy before branching into others, and always maintain the discipline to cut losses when the underlying moves against you. Those who approach 0DTE with respect and proper preparation can harness these same-day contracts as a tool for consistent returns.