What is 0dte options?

Trading 0DTE options means that a trader purchases the options contract the same day it expires. Typically an options contract has weeks and sometimes months until expiration, providing a trader with ample time to adjust or manage positions. With 0DTE options, there is little to no room for error.

What is a 0dte trade?

0DTE trades are popular among option writers. The play is to offload on the last day that the option is valid and collect the rapidly decaying premium. When purchasing an option, you pay the person selling it (the other party in the trade) for the privilege of giving you the right to buy the underlying asset at the specified strike price.

What is a 0dte call?

A 0DTE call is therefore a call option that only exists for a single trading session. As a reminder, a call option is a derivative contract that gives the buyer the right, but not the obligation, to be long 100 shares of an underlying asset at a certain price (called the strike price) on or before the expiration date.

What does 0 DTE mean?

With zero days to expiration options, the expiration date is imminent. The 0 before DTE indicates that this is the last day to make use of the option. Normally, with options, the trader has a fair bit of time to wait and see if the underlying asset moves in the direction bet on. That’s not the case with 0DTEs.