Introduction and Characteristics of Zero-Days-to-Expiration (0DTE) Options

1.What are Zero-Days-to-Expiration (0DTE) Options?
Zero-Days-to-Expiration (0DTE) options refer to options contracts that expire on the same day, often referred to as options with imminent expiration. For most U.S. stock options, the expiration date is typically on Friday each week. For ETFs like SPY and QQQ, exchanges offer options that expire every day from Monday to Friday.

2.Characteristics of Zero-Days-to-Expiration Options
(1) High liquidity, active trading, and narrow bid-ask spreads: These options are highly liquid and traded frequently, making the bid-ask spread relatively small.
(2) Rapid time decay: For out-of-the-money options, if they remain out of the money at market close, their value will drop to zero. For in-the-money options, their extrinsic value will quickly dissipate throughout the day, leaving only intrinsic value.
(3) Risk of being exercised: Holding 0DTE options carries the risk of early exercise. Traders should ensure they fully understand the relevant option strategies and manage their positions carefully before engaging in such trades.1.