We have discussed the impact of 0DTE options on the market, drawing from both practitioner insights and academic literature. Both sources point to the conclusion that 0DTE options have little or almost no impact on the market; they do not increase market volatility, contrary to what many investors have argued.
The CBOE recently updated its report with new data, which briefly reconfirmed that 0DTE options have little or no impact,
High volume doesn’t equal high risk. What matters for determining the potential impact of market maker gamma hedging activity is the balance of the volume between buys vs. sells, not the notional size. And what’s remarkable about SPX 0DTE flow is how balanced it is between buyers and sellers, puts and calls. As we outlined above, both institutional and retail investors use these options for a range of purposes – from tactical bets to systematic yield harvesting. This is why the put/call ratio for SPX 0DTE options have consistently hovered around one, in sharp contrast to non-0DTE options (where the primary use case is hedging). This is also why the net gamma exposure (or market maker positioning) of 0DTE options have been so minimal.
The report also compares retail and institutional traders, offering several useful insights.
- Both groups use similar strategies, with just over half of opening customer trades in outright puts and calls, and the remainder in multi-leg strategies. Institutional investors show a slightly higher preference for vertical spreads, while retail traders are more active in complex strategies like iron condors and butterflies.
- Institutional investors tend to initiate positions early in the trading day and leave them open longer—likely due to higher risk tolerance or the availability of alternative hedging methods. In contrast, retail traders are active both at the open and close of the trading session.
- Retail traders frequently initiate and unwind positions throughout the day, suggesting more hands-on risk management and a lower tolerance for risk.
The report highlights that while the strategies are broadly similar, the approach to timing and risk management differs meaningfully between the two groups.
Let us know what you think in the comments below or in the discussion forum.
References
[1] 0DTEs Decoded: Positioning, Trends, and Market Impact, CBOE, May 2025
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