0DTE
An option that expires on the current trading day. With zero days to expiration, its value and risk can change very quickly.
0DTE stands for zero days to expiration. Some index and ETF products, such as SPX, SPY and QQQ options, list an expiration every trading day, so there is always a contract expiring that day.
With almost no time value left, a 0DTE option’s price is driven mainly by where the underlying sits relative to the strike, and its gamma is large near the money. Small moves in the underlying can swing these contracts from worthless to valuable, or back, within minutes.
Illustrative example (hypothetical numbers, not a real trade): at 1:00 p.m. with an index at 5,000, a 5,010 call expiring that day costs $1.50. If the index closes at 5,020, the call is worth $10.00 at expiration. If the index closes below 5,010, it expires worthless.