OPTIONS TRADING · RISK
0DTE Options Are Booming: What Retail Traders Need to Know About the Risks
Options that expire the same day now make up about two thirds of all S&P 500 index options volume, and roughly half of that trading comes from retail accounts. They look cheap, they move fast, and they are gone by 4 p.m. Here is why 0DTE options took off, the risks that catch new traders, what the research says about retail results, and a calculator that shows what one trade can really cost you.
THE SHORT ANSWER
What are 0DTE options?
0DTE means "zero days to expiration": an option bought or sold on the day it expires. There is nothing special about the contract itself; a weekly or monthly option also becomes a 0DTE option on its last day. What changed is that the S&P 500 index (SPX) and the big ETFs such as SPY and QQQ now have an expiration every trading day, so there is always a contract that ends today. Because there is almost no time left, these options are cheap, react violently to small moves and lose their remaining time value by the close.
66.2%
0DTE share of all SPX options volume in July 2026, a record (Cboe).
3.4M
SPX 0DTE average daily volume in September 2026, a monthly record.
~50–54%
Cboe's 2025 estimates of retail's share of SPX 0DTE volume.
5 a week
SPX, XSP, SPY and QQQ expire every trading day, Monday to Friday.
THE BOOM
Why 0DTE options are so popular
For years SPX options expired on Mondays, Wednesdays and Fridays. In 2022 Cboe added Tuesday and Thursday expirations, and from then on there was a same-day contract every session. Cboe's own slides put the 0DTE share of SPX volume at 22% when that happened; by May 2026 it was 65%, and in July 2026 a record 66.2%. In the third quarter of 2026 SPX averaged 4.9 million contracts a day, 3.2 million of them 0DTE. The smaller mini-SPX (XSP), one tenth the size, set its own record in September 2026 at 274,000 contracts a day.
The trend is spreading. On January 16, 2026 the SEC approved Nasdaq's plan to list Monday and Wednesday expirations on the largest stocks (Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta, Tesla, Broadcom) and the iShares Bitcoin Trust, so those names now have three expirations a week instead of one. And since June 4, 2026, FINRA no longer applies the old $25,000 pattern day trader rule, which used to limit small margin accounts to three day trades a week (brokers have until October 20, 2027 to switch).
THE VOCABULARY
Terms you need before reading the risks
- DTE
- Days to expiration. 0DTE = expires today, 1DTE = tomorrow.
- Premium
- The option's price, quoted per share. One contract covers 100 shares (or 100 × the index), so a $2.00 premium costs $200 per contract. See the 100× multiplier guide.
- Theta
- Time decay: how much value the option loses as time passes with no price move. On the last day, theta is at its highest.
- Gamma
- How fast the option's sensitivity to price (delta) changes. Near expiration gamma is huge, so small moves cause large swings in the premium.
- Implied volatility (IV)
- The volatility the market prices into the option, as a yearly percentage. Higher IV = more expensive options and a bigger expected move.
- Expected move
- The roughly one-standard-deviation range the option prices imply for the rest of the day.
- Cash-settled vs physically settled
- SPX and XSP settle in cash; no shares change hands. SPY, QQQ and stock options settle in shares: exercise or assignment means you buy or sell 100 shares per contract.
- European vs American
- European options (SPX, XSP) can only be exercised at expiration. American options (SPY, stocks) can be exercised any time, so a short leg can be assigned early.
- Defined risk
- A position whose worst loss is known up front, such as a long option or a spread with a long leg protecting the short one. Selling a "naked" option is not defined risk.
THE RISKS
8 risks of 0DTE options that catch new traders
The clock works against buyers all day
An option bought with two hours left loses most of its time value in the next hour if the index just sits still. In the example below, a $4.70 call is worth $1.80 an hour later with no move, and $0.47 with thirty minutes left. A 0DTE buyer needs to be right about direction and about timing, and fast.
Small moves, huge swings, both ways
A 0.3% move in the index can add 40% to a 0DTE call; a 0.6% move can triple it. The same math cuts the other way: a 0.15% dip can take 80% off. That is what makes them exciting, and why stop-losses on the option price get skipped or filled far from where you set them.
It's 100 times the price, times the contracts
"It's only $0.50" means $50 a contract, and ten contracts is $500 that can go to zero in an afternoon. The risk is the amount you can lose, not the quoted price. Size the trade by its maximum loss as a share of your account, not by how many contracts the premium lets you afford.
Spreads and fees eat small premiums
A $0.05 bid-ask spread is 1% of a $5 option but 10% of a $0.50 one. Commissions and exchange fees are charged per contract, so cheap contracts in large size cost proportionally more. In the best-known study of retail SPX 0DTE trading, about 60% of retail losses came from these transaction costs, not from bad direction calls.
High win rate, rare large losses
Selling an out-of-the-money spread wins most days and collects a small credit; the loss, when it comes, is many times that credit. Selling uncovered (naked) options, which FINRA warns can mean unlimited loss on calls, turns one bad afternoon into a margin call. A 90% win rate is not an edge if the 10% erases it.
SPY and stock options can turn into shares
Equity and ETF options settle in shares, and an option that finishes even $0.01 in the money is exercised automatically unless you instruct otherwise. Holders can still decide whether to exercise until 5:30 p.m. ET, after trading has stopped, so after-hours news can change which options get exercised. A short leg can be assigned while your long leg expires worthless, leaving you long or short hundreds of shares the next morning. Traders call a close right at the strike pin risk.
Fewer rules doesn't mean less risk
Options approval levels are set by each broker; spreads and short options usually need a margin account and a higher level. FINRA's 2026 guidance reminds traders that intraday margin requirements still apply to everything traded during the day. With the day trade counter gone, nothing outside your own rules stops ten trades in a morning.
A new chance every day invites revenge trades
Same-day expiration means every loss can be "won back" before the close, and the next contract is always available. Fast feedback, small tickets and a lottery-like payoff are a strong mix for overtrading. Read our guide on how to stop revenge trading before you need it.
A WORKED EXAMPLE
One 0DTE call and one credit spread, two hours before the close
Assume a $10,000 account, the S&P 500 index at 6,800 (an illustrative level), two hours of trading left and implied volatility of 16%. All option prices below come from the Black-Scholes model with these inputs; real quotes will differ, especially around news.
Trade A: buy 2 SPX 6,830 calls at $4.70
Cost and maximum loss: $4.70 × 100 × 2 = $940, or 9.4% of the account. Break-even at expiration is 6,834.70, a move of +34.7 points, about 0.9 of the expected move. The model gives roughly an 18% chance of finishing above break-even. Here is what the call is worth one hour later, with one hour left:
| Index one hour later | Call value | Change | P/L on 2 contracts |
|---|---|---|---|
| 6,840 (+0.6%) | $16.51 | +251% | +$2,362 |
| 6,820 (+0.3%) | $6.49 | +38% | +$358 |
| 6,800 (no move) | $1.80 | −62% | −$580 |
| 6,790 (−0.15%) | $0.81 | −83% | −$778 |
Trade B: sell 1 SPX 6,850/6,860 call spread for $0.75
You collect $75 and the most you can lose is the width minus the credit: ($10 − $0.75) × 100 = $925. The model gives about a 91% chance of keeping the full credit and about 6% of losing the full $925. It takes thirteen winning days at the full credit to pay for one maximum loss. Under the model the trade is roughly a fair bet before costs; after bid-ask spreads and fees on four legs (in and out), it needs a real edge to come out ahead.
THE EVIDENCE
Do retail traders make money on 0DTE options?
The most-cited study, "Retail Traders Love 0DTE Options... But Should They?" by Heiner Beckmeyer, Nicole Branger and Leander Gayda (2023), used intraday SPX data from January 2021 to February 2023. It estimated that retail traders lost on average about $358,000 a day on SPX 0DTE options after daily expirations began in May 2022, up from $184,000 a day over the whole sample. Most of the loss came from bid-ask spreads and fees, and buyers did worse than sellers. That study ended in early 2023; we did not find a newer one that updates the retail loss figures.
The other side: Cboe's own research argues that a large part of 0DTE activity is in limited-risk positions and that customer buying and selling largely offset each other. Academic work points the same way for the market as a whole: Dim, Eraker and Vilkov (2024) found that 0DTE gamma and volume shocks do not amplify index moves, contrary to the popular fear that 0DTE hedging makes crashes worse. Both things can be true. The market as a whole can absorb 0DTE flow, and the average retail account can still lose money in it.
0DTE RISK CALCULATOR
What can this trade cost you?
Enter one trade before you place it. The calculator shows the maximum loss, its share of your account, the break-even, the move you need compared with today's expected move, and how many full losses in a row it takes to reach your drawdown limit.
Probabilities use a normal distribution with your IV and ignore skew, jumps and news; real odds of large moves are higher. Multiplier 100. Fees not included. Results stay in your browser.
IF YOU DECIDE TO TRADE THEM
Risk rules for 0DTE options
- Size by maximum loss. Many traders cap one trade at 1–2% of the account. On $10,000 that is $100–$200, which is one or two contracts of a $1.00 option, not twenty.
- Set a daily loss limit and stop when you hit it. Write it down before the open. Same-day options make "one more trade" too easy.
- Prefer defined risk. Long options and spreads have a known worst case. Naked short options do not, and FINRA singles them out for a reason.
- Know your settlement. With SPY, QQQ or single stocks, close or roll anything near the strike before the bell instead of holding it into exercise and assignment. With SPX and XSP there are no shares, but the final settlement value is still set at the close.
- Know your broker's cut-off. Many brokers close or restrict expiring positions before 4 p.m. ET and set their own exercise deadline earlier than 5:30 p.m. Check the help pages before your first trade.
- Respect the calendar. Fed decisions, CPI and jobs reports can move the index more in a minute than in a normal hour. Check the economic calendar and Cboe's one-day volatility index (VIX1D) before trading.
- Journal every trade. Without numbers it is impossible to tell an edge from a lucky week. The next section lists what to record.
Taxes are a separate question: SPX and XSP options are generally treated as Section 1256 contracts (60% long-term, 40% short-term gains), while SPY and stock options held for a day are short-term. That can change after-tax results noticeably; confirm with a tax professional for your situation.
WHAT TO TRACK
What to record for every 0DTE trade
A normal trade log (date, symbol, entry, exit, P/L) misses what matters for same-day options. These columns turn a log into something that can show whether your 0DTE trades work, and the formulas run in both Excel and Google Sheets.
| Column | Why it matters | Formula (example) |
|---|---|---|
| Entry time / hours left | Theta and gamma depend on time left; results often differ by morning vs afternoon. | =(TIME(16,0,0)-B2)*24 |
| IV or VIX1D at entry | Shows whether you buy cheap or expensive volatility. | typed in |
| Expected move | The yardstick for every strike you choose. | =D2*E2*SQRT(C2/6.5/252) |
| Strike distance in expected moves | 0.5× vs 1.5× out of the money are different bets. | =ABS(F2-D2)/G2 |
| Maximum loss | The real size of the trade. | =H2*100*I2 |
| % of account at risk | Catches oversized trades. | =J2/$B$1 |
| R multiple | P/L divided by maximum loss: compares trades of different size. | =K2/J2 |
| Rule followed? (Y/N) | Separates bad luck from bad discipline. | dropdown |
After 30–50 trades, the win rate, profit factor and expectancy of your 0DTE trades tell you more than any single day. If you want to build the sheet yourself, our step-by-step guide to an options trading journal in Excel covers the full layout.
READY-MADE TEMPLATE
An options trading journal
If you'd rather start with the columns, formulas and dashboards already in place, there is a ready-made Options Trading Journal for Excel and Google Sheets; check the product page for its current features.
Options Trading Journal Template for Google Sheets and Excel
The current listing describes logging the ticker, strategy, expiration, strike and premium of each trade, open/closed status with days to expiration, capital used and risk/reward, up to three partial exits, cumulative P/L, and monthly, yearly or custom-date reports with win rate and ROI.
- Risk/reward and capital used per trade
- Win rate and ROI reports
- Formulas, no macros
Trade more than options? The Options, Stock & Futures Trading Journal Template for Google Sheets & Excel keeps options, stocks and futures in one file, and the Premium Options & Futures Trading Bundle pairs it with the Futures Trading Journal.
Product features and compatibility are listed on the product page and may change.
FAQ
0DTE options questions
Are 0DTE options gambling?
The contract is a standard option, used by professionals for hedging and income. How it is traded decides the rest: buying far out-of-the-money calls with a large part of the account an hour before the close behaves like a lottery ticket. Sizing by maximum loss, using defined risk and keeping a journal make it trading rather than betting.
Are 0DTE options profitable?
For some traders, yes, but the evidence on retail accounts is not encouraging. A 2023 study of SPX 0DTE trades estimated retail losses of about $358,000 a day after daily expirations began, mostly from bid-ask spreads and fees. Track your own win rate, profit factor and expectancy over at least 30–50 trades before deciding.
Are 0DTE options cash settled?
It depends on the underlying. SPX and XSP index options are cash-settled and European-style, so no shares change hands and they can't be exercised early. SPY, QQQ and stock options settle in shares, so an in-the-money option at the close becomes 100 shares per contract unless you close it.
Do 0DTE options count as day trading?
Opening and closing the same option on the same day is a day trade. Since June 4, 2026 FINRA no longer applies the pattern day trader count and the $25,000 minimum, but brokers have until October 20, 2027 to switch, so check whether yours still counts day trades. Intraday margin requirements still apply in margin accounts.
What time do 0DTE options expire?
Trading in expiring SPX (SPXW) options stops at 4:00 p.m. ET and they settle on the closing index value. SPY and QQQ options also stop trading at 4:00 p.m. ET on expiration day, but holders can decide whether to exercise until 5:30 p.m. ET, and many brokers set earlier cut-offs.
Why are 0DTE options so cheap?
Because almost no time is left, there is little time value to pay for. Cheap per contract doesn't mean low risk: the premium is multiplied by 100 and by the number of contracts, and the whole amount can be lost in hours.
Can you lose more than you invest with 0DTE options?
Not when you only buy options: the most you can lose is the premium paid. When you sell options, losses can exceed the credit received; with a spread the loss is capped at the width minus the credit, and with an uncovered call it is theoretically unlimited.
Why are 0DTE options so volatile?
Their gamma is very high near expiration: the option's sensitivity to the index changes quickly, so a 0.3% move can change the premium by 40% or more. At the same time theta removes the remaining time value by the close.
Sources and further reading
- Cboe Global Markets: Trading volume for July 2026 (August 5, 2026): 0DTE at a record 66.2% of SPX options volume
- Cboe Global Markets: Trading volume for September 2026 (October 5, 2026): SPX 0DTE and XSP records
- Cboe Q2 2026 earnings slides: 0DTE share of SPX from 22% (2022) to 65% (May 2026)
- Cboe Insights: SPX 0DTE options jump to 61% share on retail resurgence (June 2025)
- Cboe: SPX options product specifications (cash settlement, European style, SPXW expirations)
- FINRA Investor Insights: Zeroing in on an options trading strategy: 0DTE (updated June 4, 2026)
- Bloomberg: SEC approves Monday and Wednesday expirations for the largest stocks (January 16, 2026)
- Beckmeyer, Branger and Gayda: Retail Traders Love 0DTE Options... But Should They? (SSRN, 2023)
- Dim, Eraker and Vilkov: 0DTEs: Trading, Gamma Risk and Volatility Propagation (SSRN, 2024)
- Cboe Insights: 0DTEs decoded: positioning, trends and market impact
- OCC: Characteristics and Risks of Standardized Options (Options Disclosure Document)
Checked October 26, 2026. Volume shares change every month; option prices in the examples are model values with illustrative inputs. This article is general information, not investment advice, and it is not a recommendation to buy or sell any security or to use any strategy.
