Skip to content
GetProfitable
Search
Dictionary

0DTE (zero days to expiration)

Options expiring the same day they are traded, offering extreme leverage and extreme decay.

0DTE options, mostly on SPX, SPY, and QQQ, have almost no extrinsic-value left and enormous gamma. Small index moves produce huge percentage changes in the option. They now account for a large share of index option volume.

They are lottery tickets for buyers and a theta harvest for sellers, and both sides can lose everything in an afternoon. Costs from the bid-ask-spread are large relative to the premium.

Example: at 10:00 a.m. an SPX call 20 points out of the money trades at $2. A 30-point rally by noon makes it worth $12, a 500% gain. A flat afternoon makes it worth $0.

Related: expiration-date, gamma, theta, extrinsic-value

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

How an option's time value decaysA curve sliding gently downward at first and then dropping steeply into expiry, where it reaches zero.Extrinsic (time) value6420906030Value bleeds away slowly at firstDecay speeds up hereWorth nothing at expiryexpiryDays to expiry
Time decay of an option's value. The part of an option's price that is only time — its extrinsic value — drains away every day and must reach zero at expiry. The slide is gentle months out and steepest in the final weeks, which is what traders call theta.

Educational only, not advice. Spotted an error? Post in Site Feedback.