Zero DTE Options Explained: What 0DTE Is, How Fast It Grew, and Why It Is So Risky

Zero DTE (0DTE) options are options traded on the day they expire, so they have zero days to expiration. Because their remaining time value disappears within hours, their prices react violently to small moves in the underlying: a 0.5% move in an index can double a 0DTE at-the-money option or cut its value by most of the way to zero.

In short: 0DTE is not a separate product; it is any option traded on its expiration day. They became a major part of the market after Cboe added Tuesday and Thursday expirations for S&P 500 Weeklys (SPXW) in 2022, which meant an SPX option expired every trading day. According to Cboe, 0DTE trading made up a record 62.4% of SPX options volume in August 2025, and 59% for full-year 2025, averaging 2.3 million contracts a day. 0DTE options have the highest gamma and the fastest time decay of any options, so buyers face rapid total loss and sellers face sudden, large losses.

What “0DTE” means

DTE stands for days to expiration. A 30DTE option expires in 30 days; a 0DTE option expires today. Any option becomes 0DTE on its last day, but the term usually refers to positions opened and closed (or expiring) on the same day, most often in options on the S&P 500 index (SPX), the SPDR S&P 500 ETF (SPY), and the Nasdaq-100 ETF (QQQ).

On SPX, Cboe’s PM-settled Weeklys (symbol SPXW) are European-style and cash-settled: there is no early exercise and no delivery of shares. At expiry, the settlement value is based on the closing prices of the index’s component stocks, and the cash difference is paid the next business day. The general mechanics of cash settlement are in American vs European options.

How daily expirations arrived

Short-dated index options are not new, but daily expirations are:

2005: Cboe introduced SPX Weeklys with Friday expirations.
2016: Cboe added Wednesday-expiring SPX Weeklys, and Monday expirations followed later that year.
April 18, 2022: Cboe began listing SPX Weeklys with Tuesday expirations.
May 11, 2022: Thursday expirations began, completing the set. From then on, an SPX option expired every trading day.
Late 2022: daily expirations spread to other products. Cboe lists Tuesday and Thursday expirations for XSP (the Mini-SPX index option) from October 2022, and SPY gained them in November 2022.

Daily expiries are also offered on some other index and ETF products. Single stocks generally have weekly expirations at most, so on most days a single-stock option is not 0DTE.

How big 0DTE has become

Cboe’s published figures, each dated:

Period	0DTE share of SPX options volume	Source
2023 (as of August 2023)	roughly 43% of SPX average daily volume	Cboe Insights, August 3, 2023
Q4 2024	51%	Cboe volume release, January 6, 2025
August 2025 (monthly record)	62.4%, about 2.4 million contracts a day	Cboe Insights, September 2, 2025
Full year 2025	59%, average 2.3 million contracts a day (an annual record)	Cboe volume release, January 6, 2026

In its August 2025 commentary, Cboe estimated that retail traders accounted for about 53% of SPX 0DTE volume. These are SPX-only figures; 0DTE’s share of all US listed options is smaller. For later months, check Cboe’s monthly volume reports; we have not included figures after January 2026 that we could not confirm against Cboe directly.

The arithmetic: why 0DTE prices move so violently

Take a hypothetical index at 5,000 with options carrying a $100 multiplier (like SPX), implied volatility of 15%, a 4% interest rate, and no dividends. Compare an at-the-money call (strike 5,000) with 30 days left to one with 6.5 hours left, the length of a regular trading session. Prices are Black-Scholes values; the index moves instantly and nothing else changes.

Cost and sensitivity

	30-day call	0DTE call (6.5 hours left)
Price per index point	94.09	8.22
Cost per contract	$9,409	$822
Delta	0.539	0.504
Gamma (per point)	0.0019	0.0195

The 0DTE call costs less than a tenth as much but has about ten times the gamma. Gamma, explained in gamma explained, measures how fast delta changes.

What happens when the index moves

Index move	30-day call value	Change	0DTE call value	Change
minus 50 points (minus 1%)	69.46	minus 26%	0.05	minus 99%
minus 25 points (minus 0.5%)	81.19	minus 14%	1.10	minus 87%
unchanged	94.09	0%	8.22	0%
+25 points (+0.5%)	108.14	+15%	26.23	+219%
+50 points (+1%)	123.31	+31%	50.20	+510%

A half-percent move, a normal day for a stock index, turns the 0DTE call into roughly triple its value or wipes out almost 90% of it. After a 25-point rise, its delta jumps from 0.50 to 0.89; after a 25-point fall, it drops to 0.11. That is what high gamma means in practice.

Time decay measured in hours

If the index doesn’t move at all, the 0DTE call loses its entire $822 by the close. With 2 hours left and the index still at 5,000, it is worth about 4.54 points ($454): almost half its value gone in four and a half hours of a flat market. Daily theta for a 30-day option is described in theta and time decay; for 0DTE, the decay happens within a single session.

Out-of-the-money 0DTE options

The most popular 0DTE contracts are often cheap out-of-the-money ones. With the same hypothetical index at 5,000 and 6.5 hours left, a 5,025-strike call (0.5% out of the money) is priced at about 1.12 points, or $112 per contract, with a delta of 0.11. If the index rises 50 points, it is worth about 26.25 points ($2,625), more than 23 times its cost. If the index is flat or lower at the close, it expires worthless. The model’s price already reflects the low odds of the first outcome; the size of the potential gain is what the buyer is paying for, not a sign of an underpriced bet.

The seller’s side

A seller of that 0DTE call collects $822 and keeps it all if the index finishes at or below 5,000. But if the index rises 50 points, the call is worth $5,020 and the seller has lost about $4,200, more than five times the premium collected, in a single session. Selling 0DTE options means accepting frequent small gains against occasional losses many times larger, with almost no time to react.

Why people trade them

Explanations commonly given include low cost per contract, the ability to take a view on a single day’s events (such as an inflation report or a Federal Reserve announcement), avoiding overnight risk, and for sellers, the speed of time decay. Institutions also use them for short-term hedging. None of these makes 0DTE options cheap in risk terms; low cost per contract simply reflects how little time value is left.

What the research says about retail 0DTE trading

Peer-reviewed evidence on 0DTE specifically is still limited. A widely cited working paper, “Retail Traders Love 0DTE Options… But Should They?” by Heiner Beckmeyer, Nicole Branger, and Leander Gayda (University of Münster, first posted 2023), used trades routed through price-improvement auctions as a proxy for retail activity. It found that more than 75% of those trades in S&P 500 options were 0DTE and estimated that, after daily expirations were introduced, retail traders lost about $350,000 a day in aggregate on 0DTE options, driven largely by transaction costs. A 2025 working paper by Amaya, Garcia-Ares, Pearson, and Vasquez, supported by a Cboe data grant, argues that this proxy captures only 4% to 6% of S&P 500 index option trading and is too small to represent retail activity. Neither paper had appeared in a peer-reviewed journal as of the versions we reviewed. The broader research on retail options returns is in why most options buyers lose.

What can go wrong

Total loss within hours. An out-of-the-money 0DTE option bought in the morning often expires worthless the same afternoon.
Losses many times the premium for sellers. An uncovered short 0DTE option can lose several times the premium on an ordinary index move.
Spreads relative to price. A spread of a few cents on a contract priced at 0.50 is a large percentage cost, paid on entry and exit.
Speed. Positions can move from profit to loss in minutes, faster than many people can react.
Settlement surprises on ETF options. SPY and QQQ options are American-style and physically settled: an in-the-money 0DTE option at the close becomes 100 shares per contract, and after-hours moves can change the outcome. See what happens at expiration.
Leverage compounding behaviour. Cheap contracts and fast outcomes make it easy to trade repeatedly in one session.

Takeaway

0DTE options are ordinary options on their final day, made available every trading day on SPX since May 2022, and they now account for most SPX volume by Cboe’s count. With hours rather than weeks left, they combine extreme gamma with near-instant time decay: small index moves produce huge percentage swings, buyers routinely lose the entire premium, and sellers can lose multiples of what they collected in a single session.