0DTE Volatility Drives Record Index Options Volume at Cboe

• Cboe Global Markets reported a record monthly average daily volume of 6.0 million contracts for proprietary index options in February 2026.
• 0DTE SPX options accounted for 3.0 million contracts, representing 63% of all SPX trading during the month.
• The surge in demand for short-term volatility products aligns with broader trends in institutional and retail trading activity.

Cboe Global Markets reported strong performance in its index options market during February 2026, with the S&P 500 Index (SPX) options ADV reaching 4.8 million contracts according to the report. The significant contribution from 0DTE SPX options highlights the growing popularity of these instruments among traders seeking to hedge or speculate on short-term price movements. This performance underscores the expanding role of derivatives in modern trading strategies.

The rise in 0DTE SPX options volume indicates increased market participation and a shift toward more tactical volatility trading. This trend is not limited to SPX options, as the broader index options market also saw a 33.7% increase in ADV compared to February 2025. Such growth reflects evolving investor behavior and the increasing sophistication of market participants in managing risk.

In addition to index options, Cboe's U.S. on-exchange equities trading increased by 17.2% year-over-year, while off-exchange matched shares rose by 176.6% according to the analysis. These figures highlight the robustness of the overall market infrastructure and the growing demand for diverse trading venues. European equities also performed well, with Cboe Europe reporting a record average daily notional value of €18.0 billion.

What Drives the Demand for 0DTE Options?

The demand for 0DTE options is closely tied to the volatility risk premium and the strategies hedge funds employ to exploit it. Institutions and hedge funds like Citadel leverage the difference between implied and realized volatility to generate alpha by managing delta-neutral portfolios and engaging in gamma scalping . This systematic approach allows them to profit from the persistent inefficiencies in the volatility market. The GameStop and Volmageddon events serve as real-world examples of how volatility can lead to significant market disruptions and arbitrage opportunities.

The volatility risk premium remains a compelling area for institutional investors who seek to capitalize on mispricings in the options market. By selling options at a premium and rebalancing positions to maintain delta neutrality, hedge funds can systematically benefit from the spread between expected and actual market volatility. This strategy, however, requires sophisticated risk management and a deep understanding of the Greeks and the Black-Scholes model .

Why Is This Trend Important for Investors?

The surge in index options trading volume is a reflection of broader market dynamics and changing investor behavior. As more retail and institutional investors participate in derivatives markets, the liquidity and depth of these markets continue to expand. This increased activity may also lead to greater market efficiency and more accurate pricing of risk.

For investors, the growth in 0DTE options trading offers new opportunities for managing risk and generating returns according to market analysis. However, it also introduces challenges, such as the need for more advanced analytical tools and the potential for increased volatility during periods of market stress as observed in recent events. Investors must remain vigilant about the risks associated with short-term trading strategies and ensure that their portfolios are appropriately diversified.

The continued expansion of index options trading, particularly in the 0DTE segment, is likely to have long-term implications for market structure and investor behavior. As demand for these instruments grows, exchanges and market participants will need to adapt to evolving regulatory and operational requirements. For now, the record volumes reported by Cboe Global Markets serve as a clear indicator of the shifting landscape in derivatives trading.