The Explosive Growth of Zero Day Options Trading: Why Professionals Are Betting Big

The financial markets have witnessed a remarkable surge in a particular trading instrument that was virtually unknown to retail investors just a few years ago. Zero day options have transformed from a niche strategy favored by seasoned professionals into one of the most actively traded financial products on the market. This transformation didn’t happen overnight—it’s the result of regulatory changes, technological advances, and market evolution that have made same-day expiring options more accessible than ever.

Understanding Zero Day Options at a Glance

At their core, zero day options—commonly referred to as 0DTE contracts—are options that expire on the same day they trade. Unlike traditional options that might expire weeks or months out, 0DTE options compress all of their value into a single trading session, making them uniquely sensitive to intraday price movements of the underlying asset.

The appeal is straightforward: traders who accurately predict where an asset will move within hours can capture significant returns. Because time decay works in their favor when selling these instruments, and against buyers who hold them, the mechanics are entirely different from standard options trading. This theta decay effect—the erosion of option value as expiration approaches—becomes the dominant force in pricing during the final hours of trading.

Which Assets Can You Trade with Zero Day Options?

Technically, any optionable stock has zero day options available at minimum once monthly, when monthly options expire. However, the real opportunities lie with instruments that offer more frequent expirations. The S&P 500 Index (SPX) has emerged as the undisputed heavyweight in this space, offering 0DTE contracts every single trading day since 2022.

The SPX dominates for a compelling reason: liquidity. With tight bid-ask spreads and enormous volume, traders can enter and exit positions with minimal slippage and execution costs. In contrast, most individual stocks lack the order flow depth to make 0DTE trading practical—you might wait for fills or receive worse execution prices than you’d anticipate.

Weekly-expiring options on other indices and ETFs provide additional opportunities, though typically with less volume than the SPX. The SPDR S&P 500 ETF Trust (SPY) represents another popular vehicle, though daily expiration availability varies.

Zero Day Options vs. Traditional Day Trading Rules

Here’s where regulatory reality intersects with trading strategy: opening and closing a 0DTE option contract within the same day counts as a day trade under SEC rules. This means your account must maintain a minimum $25,000 balance to avoid Pattern Day Trader (PDT) restrictions.

However, there’s a loophole that changes the calculus entirely. If you buy or sell a 0DTE option and let it expire naturally without closing the position, this doesn’t register as a day trade. The trade settles automatically at expiration, bypassing PDT rules. This distinction has profound implications for how traders structure their zero day options positions and manage their capital efficiency.

For traders with smaller accounts, letting 0DTE positions expire requires accepting that you can’t intervene if the trade moves against you—a critical limitation when intraday volatility can swing hundreds or thousands of dollars within minutes.

From Niche Strategy to Market Mainstream

The journey of zero day options to market prominence reveals how regulatory decisions can reshape trading behavior. In 2005, the Chicago Board Options Exchange (CBOE) introduced weekly options, immediately enabling traders to access 0DTE contracts once per week. The CBOE subsequently added Monday and Wednesday options, further expanding opportunities.

The watershed moment arrived in 2022, when 0DTE options became available on the SPX and major indices for every trading day of the week—Monday through Friday. This decision unlocked explosive growth. According to Goldman Sachs, the volume explosion has been staggering: nearly half of all trading volume on the SPX now consists of 0DTE trades. This transformation has made intraday options trading a core strategy for institutional investors and sophisticated traders.

The Three Core Advantages Driving Adoption

Speed and Scalability: Zero day options let traders capture profits from short-term moves without overnight risk. Close a winning position before the market closes, and you’re done—no exposure to gap moves or overnight news.

Superior Liquidity: The concentration of volume in SPX 0DTE contracts means tight spreads, fast execution, and the ability to trade larger size without moving markets. This is essential for professionals running systematic strategies.

Tactical Flexibility: With contracts expiring every day, traders can recalibrate their market view and positioning multiple times weekly. Reacting to earnings, economic data, or technical levels becomes a core part of the trading strategy rather than something constrained by monthly expiration calendars.

Execution Playbook: Building Your Zero Day Options Strategy

Traders typically employ two fundamental approaches with zero day options. The first—buying for scalp trades—involves purchasing calls or puts in anticipation of directional moves, betting that quick price swings will generate profits before expiration.

The more popular approach involves selling zero day options to collect premium. The logic is powerful: any out-of-the-money (OTM) option expires worthless at the end of the day, yielding 100% profit on the premium collected. This creates a high-probability win scenario—but only if the underlying stays in the predicted range.

The challenge emerges during execution. Markets can whipsaw violently in a single day, especially around data releases. Even if an option ultimately expires OTM and generates profit, the unrealized loss during the trading session might spike to stomach-churning levels. This is why active management—adjusting positions as market moves unfold—is non-negotiable.

Iron Condor Mastery: The Neutral Play

The iron condor stands as perhaps the most popular zero day options strategy among professionals. The structure: simultaneously sell both a put credit spread and a call credit spread on the same underlying asset.

This approach thrives in range-bound markets where the underlying is expected to trade within defined boundaries until expiration. The trader profits if the asset stays between the sold strikes—which happens most of the time, hence the strategy’s reputation for high win rates.

Here’s the math: sell a 5-wide iron condor (selling strikes 5 points apart) and you collect a credit—say, $200. Your maximum loss is capped at the width of the spreads minus the credit received: $500 - $200 = $300 maximum loss. The maximum profit is limited to the credit collected.

The catch is maintenance. If the underlying asset suddenly moves outside the range—which can happen shockingly fast in 0DTE trades—you’ll need to actively adjust positions, potentially buying back losing sides or expanding the structure. Letting a losing iron condor run until expiration can drain your account quickly.

Iron Butterfly: Collecting Premium in Choppy Markets

The iron butterfly represents an alternative when traders anticipate price stability with potentially declining volatility. This structure begins by selling an at-the-money (ATM) call and an ATM put simultaneously—creating a short straddle. To limit losses, the trader then purchases further out-of-the-money call and put options at wider strike prices.

The iron butterfly’s genius lies in selling the most expensive options (ATM strikes) rather than cheaper OTM strikes, allowing traders to collect fatter premiums upfront. If volatility collapses and the underlying stays near current prices, the trade can profit significantly.

The risk structure is similar to the iron condor: maximum profit and loss are defined at trade entry. A 5-wide iron butterfly yields identical risk/reward metrics to a comparable iron condor, but the premium collected is typically larger because you’re shorting the belly of the curve where option prices are steepest.

Many traders using zero day options with iron butterflies adopt a “collect and close” approach: once they’ve captured 25-50% of the premium upfront, they close the entire position rather than sweating it out until expiration. This locks in profits while side-stepping the worst-case scenario.

The Bottom Line on Zero Day Options

Zero day options represent a fundamentally different approach to options trading, enabled by structural changes in how derivatives markets operate. What was once a strategy for elite professionals has become accessible—though no less risky—for traders who can navigate the regulatory environment and stomach the volatility.

The statistics are undeniable: half of SPX trading volume now flows through zero day options, reflecting a genuine shift in how markets function. Whether you’re pursuing scalp trades, selling iron condors, or deploying iron butterflies, the core advantage remains unchanged—the ability to profit from short-term asset movements compressed into a single trading day.

Success with zero day options demands discipline, active management, and a realistic understanding of risks. But for traders equipped with the right strategy, capital base, and psychological fortitude, these instruments offer opportunities that traditional longer-dated options simply cannot provide.