0DTE Volatility Surges as Traders Hedge Near-Term Market Risks

0DTE options are growing in popularity among traders for hedging or speculating on near-term volatility events such as CPI/PPI data and central bank decisions according to market analysis. These contracts allow traders to align option expirations with specific macroeconomic events, reducing exposure and improving strategy effectiveness as reported by CME Group. In 2025, E-mini S&P 500 options trading volume with zero to five days to expiration increased significantly, with daily volumes rising from 350K to 770K contracts according to trading data.

Traders are increasingly adopting 0DTE options due to their flexibility and liquidity. These contracts allow precise risk management and eliminate overnight exposure to volatility. For example, after just one day of 0DTE options trading in TSLA, more than 44% of the options volume was on the 0DTE expiry.

The shift toward 0DTE options is evident in both institutional and retail trading behavior. Platforms like Futu and Moomoo have expanded the frequency of options expirations, including Monday and Wednesday expiries, to meet demand for ultra-short-term instruments as market reports indicate.

Why is 0DTE Volatility Rising in 2026?

The rise in 0DTE options is tied to a broader trend of event-based trading strategies. Traders are aligning option expirations with key macroeconomic events like CPI data releases and Fed announcements to capture directional moves or hedge exposure according to CME Group analysis. This shift reflects the need for more dynamic tools in an environment marked by persistent inflation and uncertainty around central bank policies as market data shows.

How Do 0DTE Options Improve Risk Management?

0DTE options enable traders to manage exposure to high-impact events more effectively than traditional long-dated options. For instance, by aligning expiration dates with event dates, traders can reduce overnight exposure and refine strategy execution according to CME Group research. This approach is particularly relevant for managing risks around central bank decisions and data releases, where market reactions can be swift and unpredictable as market reports indicate.

The surge in 0DTE options also aligns with the use of multi-leg options trading and liquidity across various indices. These instruments are part of a broader ecosystem that supports dynamic, event-based strategies, especially in environments of high volatility according to CME Group analysis.

What Are the Implications for Market Structure and Retail Behavior?

February has seen a shift in market behavior, with elevated retail activity and record net inflows. Retail traders are increasingly using 0DTE options in high-beta and thematic stocks, such as precious metals and technology according to market analysis.

Institutional traders are also leveraging these tools to hedge against catalysts like earnings reports and macroeconomic events. This combination of retail and institutional flows contributes to the volatility and direction of market movements as market reports show.

The popularity of 0DTE options reflects a broader shift toward ultra-short-term instruments. As platforms expand trading windows and increase the frequency of expirations, traders have more opportunities to manage exposure and capture directional moves according to market analysis. This trend is expected to continue as market conditions evolve in 2026.