How 0DTE options behave
- Time decay (theta) is extreme: most of the remaining value disappears in the final hours.
- Gamma is very high, so delta swings quickly as price moves.
- Out-of-the-money contracts often expire worthless.
Why they matter for the whole market
Heavy same-day volume means dealers hedge intraday. That hedging can pin the index near large strikes on calm days or speed up moves when price breaks away.
Common approaches (examples, not advice)
- Defined-risk spreads instead of naked options, so the maximum loss is known.
- Small position sizes — a full loss is a normal outcome.
- Closing positions before the last hour, when moves get erratic.