The final hours of an option's life are the most intense. On expiration day—especially in the last 3-4 hours of trading—options experience acceleration in theta decay that's almost unbelievable. That rapid time value collapse is what draws traders to 0DTE (zero days to expiration) strategies.

But 0DTE trading isn't just about explosive decay. It's a high-risk, high-reward game where your position can swing 10% in minutes. The promise: capture 3-5 days' worth of theta decay in a single day. The risk: early assignment, gap moves, and liquidity crunches can turn profits into losses just as fast.

This guide breaks down how 0DTE works, when to use it, and how to combine it with your broader income strategy—without blowing up your account.

Prefer longer DTE? If 0DTE feels too aggressive, use our Strategy Analyzer to find cash-secured puts and covered calls with 7-45 DTE—capturing theta decay at a more manageable pace.

Why 0DTE Works: The Theta Acceleration Curve

Here's the math behind 0DTE's appeal.

Over the first 45 days of an option's life, theta decay is fairly linear. A 45 DTE put might lose $0.02 per day in time value. At 30 DTE, maybe $0.03/day. The decay accelerates, but it's predictable.

At 7 DTE, theta accelerates dramatically. Decay might be $0.08-0.12 per day.

At 3 DTE, it's $0.20-0.30 per day.

At 1 DTE, it's $0.40-0.60 per day.

At 0 DTE, all remaining time value evaporates in a few hours.

Here's a real example:

Say you sell a cash-secured put on SPY at a $420 strike with 1 day to expiration:

At market open (8 hours of trading left): The option is worth $0.30
At 12:00 PM: The option is worth $0.15
At 2:30 PM (30 minutes to close): The option is worth $0.05
At 3:59 PM: The option is worth $0.01

That's $0.29 in profit captured in a single day—on an option that would have decayed $0.40-0.50 if held from 1 DTE. The decay isn't faster per se; it's just that all remaining time value is concentrated in those final hours.

The 0DTE edge: You're not betting on directional movement. You're betting on time value disappearing faster than implied volatility increases.

The 0DTE Trading Window: When Opportunities Emerge

0DTE traders don't wait for expiration week. They trade on expiration day itself.

The optimal 0DTE window opens when:

Market has been relatively stable (low realized volatility) → IV doesn't spike → theta decay is pure profit
Implied volatility is higher than recent realized volatility → You're getting paid for volatility that may not materialize → perfect for premium selling
The underlying is 1-2% away from your strike → Assignment probability is manageable, but premium is still juicy
You have time to monitor the position → 0DTE requires active management, not set-and-forget

Typical 0DTE opportunities:

9:35-10:00 AM ET: First 30 minutes post-open. IV is highest because traders are repricing overnight gaps and news. Sell here, close 2-3 hours later.
2:00-3:30 PM ET: Mid-afternoon window. Morning volatility has settled, but enough time remains for theta to matter. Close 45 minutes before market close.
NOT 3:50-4:00 PM: Too late. Illiquidity spikes, bid-ask spreads widen, and a $0.01 position becomes hard to close cleanly.

The 0DTE Risk Matrix: Assignment and Gap Risk

Here's where 0DTE gets dangerous.

Early Assignment Risk on 0DTE

By definition, 0DTE options are deep in-the-money (ITM) or right at-the-money (ATM). That means assignment probability is high.

If you sell a 0DTE cash-secured put and the underlying drops through your strike at 2:00 PM:

Scenario 1: Dividend payment today

Your put gets assigned immediately (brokers assign ITM options before ex-dividend cutoff)
You own 100 shares of a stock you didn't expect to own until tomorrow
You must immediately sell covered calls or exit the position

Scenario 2: No dividend, but deep ITM

Assignment probability is 80%+ by afternoon
You can close the position before assignment, but liquidity might be thin
Bid-ask spread might be $0.01 or more (on a $0.05 position, that's 20% of your profit)

The fix: Accept that 0DTE positions have 50-70% assignment probability. Plan for ownership.

Gap Risk: The Overnight Killer

0DTE is a daytime strategy. But markets don't respect the 4 PM close.

If you sell a cash-secured put at 3:45 PM (closing time):

Market is open for 15 minutes
News hits after close: Fed announcement, earnings miss, geopolitical event
Tomorrow: gap down 2-3%
Your $420 put is now worth $2.00 instead of $0.05
Your $0.30 profit just became a $1.70 loss

The fix: Never hold 0DTE positions overnight, even if you think you'll close them at open. Gaps happen. If you want to trade overnight theta decay, move to 1-2 DTE positions in pre-open 0DTE (yes, this exists; you can trade tomorrow's 0DTE today).

Liquidity Risk: Bid-Ask Spread Explosion

0DTE positions are illiquid compared to 1-7 DTE. Here's why:

Bid-Ask Spread by Days to Expiration (SPY $420 put):

30 DTE: Bid $0.89, Ask $0.91 (spread: $0.02)
7 DTE: Bid $0.45, Ask $0.47 (spread: $0.02)
1 DTE: Bid $0.22, Ask $0.24 (spread: $0.02)
0 DTE (mid-morning): Bid $0.15, Ask $0.19 (spread: $0.04)
0 DTE (2 hours to close): Bid $0.02, Ask $0.05 (spread: $0.03)

See the problem? The spread widens as a percentage of the position size. You're selling a $0.20 premium into a $0.04 spread. You're paying $0.02 of your $0.20 profit just to buy back the position.

The fix:

Plan to close positions at bid (don't try to time the ask)
Accept 20-30% of theoretical theta profits will be lost to friction
Use limit orders; don't market order

0DTE Position Sizing: The Conservative Framework

Because 0DTE has higher assignment and gap risk, position sizing matters more than in 1-7 DTE trading.

Rule: 0DTE positions should represent no more than 20-30% of your weekly theta target.

Here's why:

Say you typically earn $500/week from 1-7 DTE covered calls and cash-secured puts. A bad 0DTE day (gap at open, liquidity crash, unexpected assignment) can wipe $300-500. That's 1-2 weeks of income gone.

Conservative 0DTE sizing:

Use 50-75% of your normal cash-secured put capital
Only trade the highest-liquidity underlyings (SPY, QQQ, IWM, individual mega-caps)
Set a hard stop loss: If assignment happens and your underlying moves 2% against you, close it immediately

Aggressive 0DTE sizing:

Use 100% of capital on high-confidence setups
Trade more obscure underlyings (more premium, less liquidity)
Accept that 10-20% of 0DTE plays end in assignment + forced exit

The 0DTE Setup: Entry and Timing

Best Markets for 0DTE

Not all market conditions favor 0DTE strategies. Here's when to be aggressive vs. defensive:

Aggressive 0DTE (sell more premium):

IV percentile > 70% (implied vol is elevated relative to historical vol)
Realized volatility (last 5-10 days) is lower than implied vol → market is pricing in risk that won't materialize
Market is directionless → no strong trend, just ranging
30-60 minutes post-market open → maximum IV, less time-value decay pricing

Defensive 0DTE (reduce size, tighten strikes):

IV percentile < 20% (vol is cheap; won't decay much)
Earnings announced today or tomorrow → binary risk
Fed announcement, jobs report, or geopolitical risk → unpredictable gap risk
Market is trending hard (up or down) → assignment probability is extreme

The 0DTE Selling Framework

Step 1: Pick your underlying

Highest daily volume (SPY, QQQ, IWM, or mega-cap stocks: AAPL, MSFT, TSLA)
At least 1,000+ contracts on your strike (ensures exit liquidity)

Step 2: Select your strike

Cash-secured puts: Sell 0.30-0.50 delta (these are closer to ATM, higher premium, higher assignment risk)
Covered calls: Sell 0.20-0.40 delta (lower assignment risk, but less premium)
Spreads: Sell spreads 1-2% OTM, use wider widths than usual (e.g., $5 wide vs $2 wide for 1 DTE)

Step 3: Set your entry trigger

Enter 30-45 minutes after market open (IV is highest post-open, theta decay is starting)
Wait for a 0.5-1% pullback if you're selling puts (better entry premium)
Place limit orders, don't market order (you'll overpay for entry)

Step 4: Set your exit trigger

Exit when: Position reaches 50% max profit OR 1.5 hours before close (whichever comes first)
Use mental stop loss: -20% of capital on the trade
Close all 0DTE positions by 3:00 PM ET (avoid final hour chaos)

Real Example: 0DTE SPY Cash-Secured Put

Setup:

Date: November 3, 2025 (expiration day)
SPY is trading at $423.50
Sell the $423 put

Timeline:

Time	SPY Price	$423 Put Price	Your P&L	Action
9:40 AM	$423.20	$0.45	-$0.45	Sell (limit order at $0.45)
10:15 AM	$423.10	$0.32	+$0.13	Monitoring
11:00 AM	$424.00	$0.18	+$0.27	Still holding
12:30 PM	$423.80	$0.08	+$0.37	Getting close to max profit
1:15 PM	$424.20	$0.03	+$0.42	Exit at bid ($0.02-0.03 spread)
Result:			+$0.42 profit on $0.45 premium	93% max profit captured

What just happened:

You captured $0.42 in decay in ~4 hours
You avoided the final 3 hours (which might have seen a news event, gap risk, assignment)
You closed early at 93% max profit, forgoing the last $0.03 to eliminate overnight risk
You freed up capital to run another 0DTE in the same day if the setup improves

Combining 0DTE with Your Weekly Income Strategy

0DTE shouldn't replace your primary income strategy—it should supplement it.

Here's how to integrate 0DTE into a balanced portfolio:

Scenario 1: Mostly Weekly CSPs + Monthly CCs + 0DTE

Your baseline strategy:

Monday-Friday: Sell 7-DTE cash-secured puts, close at 50% profit (2-3 business days later)
Monday-Friday: Sell 30-DTE covered calls on held stock, roll at 50% profit
2-3x per week: Sell 0DTE CSPs on high-IV days (supplement income on quiet days)

Capital allocation:

60% to 1-7 DTE positions (consistent, predictable income)
20% to 30+ DTE positions (wheel strategy, long-term income)
20% to 0DTE positions (high-frequency theta capture)

Why this works:

1-7 DTE positions generate $500-750/week (stable)
0DTE positions add $100-200/week (opportunistic boosts)
Monthly CCs generate $300-500/month (passive income during hold)
Total: $2,000-2,500/month on $50k capital

Scenario 2: Aggressive 0DTE Scalping

Your baseline strategy:

80% of capital in 0DTE CSPs/CCs, traded 2-4x per day on high-volume days
20% reserved for 1-7 DTE positions as a hedge

Entry/Exit:

Morning 0DTE (9:35-11:30 AM): Sell CSPs, close at 50-75% profit
Afternoon 0DTE (1:00-2:30 PM): Sell CSPs/CCs, close at 50-75% profit
Late afternoon: Don't hold anything

Capital needs: This requires $10-20k minimum (to absorb 1-2 bad days) and active monitoring.

Realistic returns: $50-100/day on $50k capital = $1,000-2,000/month if you execute 250 trading days/year. But requires 4-6 hours of active trading daily.

Risk Management: The 0DTE Adjustment Playbook

Even with perfect entry/exit timing, 0DTE positions can blow up. Here's your playbook for damage control.

Adjustment 1: The Early Assignment Trap

Scenario: You sell a 0DTE cash-secured put, it gets assigned at 1:00 PM. You now own 100 shares.

Your options:

Immediately sell covered calls (same strike or higher) to lock in profit and create a wheel cycle
Exit the position by selling the shares (cap your loss/profit)
Hold and manage it as a position (only if you wanted to own the stock anyway)

The math:

Sell $420 put for $0.50 (get assigned) → own 100 shares at effective cost of $419.50
SPY drops to $418 in the last hour
Your shares are down $150
Sell $420 call for $0.15 → lock in net $0.35 profit despite the price drop

Adjustment 2: The Gap-at-Open Hedge

Scenario: You sell a 0DTE put for $0.40 at 3:45 PM. Overnight, gap down 2%. Tomorrow's 0 DTE put is worth $2.50.

Prevention (not adjustment, but critical):

Never sell 0DTE positions in the final 10 minutes of trading
Avoid selling 0DTE before earnings, Fed announcements, or major economic data
Place hard stops: If your position is down 30% by 3:00 PM, just close it

Adjustment (if you get caught):

At market open, immediately sell a call spread to hedge downside (e.g., sell $418 call, buy $416 call)
This caps your loss while you close the put position
Your net might be -$0.50 instead of -$2.10

Adjustment 3: The Liquidity Crunch

Scenario: It's 3:55 PM, your 0DTE position is worth $0.02, and the bid-ask spread is $0.01-$0.04. You can't exit cleanly.

Your moves:

Place an aggressive limit order (at the bid, not midpoint) and cancel it at 3:59:45 PM if unfilled
Use spreads to exit (buy back at ask price in a spread format, sell a call at higher strike to offset)
Let it expire (only if you're ok with assignment; if it's a put and you have cash, assignment is fine)

Lesson: Don't get here. Close positions by 3:00 PM ET on 0DTE days.

0DTE on Different Underlyings: Strategy Variations

0DTE on SPY/QQQ (Easiest)

Highest liquidity
Widest bid-ask spreads are still reasonable ($0.01-0.02)
Highest IV, most consistent premium
Best for: Beginners learning 0DTE
Position size: Start with 1-2 contracts

0DTE on Individual Stocks (Higher Risk, Higher Reward)

AAPL, MSFT, TSLA:

Premium is 2-3x higher than SPY on same delta
Liquidity is decent, but bid-ask spreads widen more on 0DTE
Single stock gaps are more frequent than index gaps
Best for: Experienced traders with tight risk management
Position size: 1 contract only; use spreads instead of naked positions

0DTE on Earnings Dates (Avoid)

IV is artificially inflated (priced for binary move)
Realized volatility will spike or drop based on earnings result
Not suitable for pure theta decay plays (you're really trading direction)
Only consider if: You have a directional thesis (put spreads on stocks you think will beat)

0DTE on Quiet / Low-Volatility Days (Best Risk/Reward)

IV is low relative to normal (less premium upfront)
But realized vol is also low (less likely to gap against you)
This is your sweet spot: theta decay > directional moves
Action: Sell 0DTE on Mondays-Wednesdays when markets are calm

Combining 0DTE with the Wheel Strategy

If you run a wheel strategy (CSP → assignment → covered call → repeat), 0DTE fits perfectly as a supplement.

Weekly wheel cycle:

Monday: Sell 7-DTE CSP, target 50% profit in 3-5 days
Thursday-Friday: If CSP is closed at profit, sell new 7-DTE CSP OR jump to 0DTE if IV spikes
Friday: Sell 30-DTE covered call on assigned stock
Daily: On quiet/high-IV days, sell 1-2 0DTE CSPs for quick income bursts

The math:

CSP + CC per week: $150-250
0DTE boosts (2-3 per week): $50-100
Total: $200-350 per week = $10,400-18,200 per year on $50k capital

This is how Days to Expiry platform helps: track your 0DTE entry/exit points, monitor assignment probability in real-time, and measure 0DTE vs. traditional theta income side-by-side.

0DTE Mistakes to Avoid

Holding 0DTE past 3:00 PM ET
- Gap risk explodes after hours
- Overnight moves wipe out daily profits
- Solution: Set a hard rule—exit by 3:00 PM ET
Over-sizing 0DTE positions
- Tempting to trade more because it "decays so fast"
- One bad gap wipes out a week of 0DTE profits
- Solution: Cap 0DTE at 20-30% of weekly income target
Selling 0DTE into low IV
- Boring strategy in boring markets
- Premium is small, gaps are unpredictable
- Solution: Sell 0DTE only when IV percentile > 50%
Not accepting assignment as normal
- 0DTE CSPs have 50-70% assignment probability
- Fighting assignment (trying to close mid-day) burns profits to slippage
- Solution: Plan for assignment; have your next move ready (roll to call, wheel, or exit)
Trading earnings days
- IV is inflated, but realized vol will spike
- Not a theta decay play; you're gambling on direction
- Solution: Skip 0DTE on known earnings dates
Getting caught in the final 5 minutes
- Liquidity crashes, your $0.05 position becomes hard to close
- You either accept assignment or eat slippage
- Solution: Exit all 0DTE by 3:50 PM ET, period

0DTE Platform Tools: What to Look For

If you're using Days to Expiry or similar platforms to track 0DTE:

Essential features:

Real-time theta visualization: See decay curve for 0DTE positions
Assignment probability tracking: Know your odds minute-by-minute
IV percentile alerts: Get notified when IV crosses thresholds (sell above 60%, buy below 40%)
Position P&L by date: Measure 0DTE income separately from 1-30 DTE income
Liquidity analysis: See bid-ask spreads and expected slippage before entry

Premium features:

0DTE scanner: Automatically find high-IV, high-liquidity 0DTE opportunities
Expiration calendar: Visual tracking of which underlyings expire each day
Gap risk alerts: Notifications for upcoming earnings, economic data, news events

The Bottom Line: Is 0DTE Right for You?

0DTE is not for everyone. It's a tactical income booster, not a primary income strategy.

0DTE is right if you:

Have 2-4 hours of daily availability to monitor positions
Can stomach 20-30% daily swings on your 0DTE capital
Already run a successful 1-7 DTE or wheel strategy (0DTE should supplement, not replace)
Accept that gaps and assignments are part of the game
Have at least $10k capital (to absorb bad days)

0DTE is NOT right if you:

Can't actively monitor positions during the trading day
Need predictable daily income (0DTE is feast-or-famine)
Are still learning options basics (master 1-7 DTE first)
Can't emotionally handle rapid theta decay suddenly reversing

My recommendation: Start with 1-2 small 0DTE trades per week once you've mastered 1-7 DTE strategies. Measure the profits (and losses). See if the effort (2 hours of active trading) is worth the extra $50-100/week. For most traders, 1-7 DTE is enough. For active traders seeking maximum income, 0DTE is a powerful supplement.

The edge is real—but the risk is real too. Respect both.

Learn more about the strategies that combine with 0DTE:

Cash-Secured Puts Playbook: DTE Optimization & Assignment Risk – Understand assignment probability frameworks that apply to 0DTE
Implied Volatility & Days to Expiry: Timing Your Options Entries – IV optimization for 0DTE entries
Options Greeks Explained: Income Trader's Guide – How delta and theta accelerate at 0DTE
Theta Decay in Options: DTE Curves & Time Value Optimization – Deep dive into the math behind 0DTE decay

0DTE Options Strategy: Day of Expiration Income Tactics