0DTE Options Strategies
Zero days to expiration options — how to generate daily income by selling options that expire the same day, using Iron Condors, Iron Flies, and directional spreads on SPX.
What Are 0DTE Options?
0DTE (zero days to expiration) options are options contracts that expire on the same day they are traded. For SPX (S&P 500 Index), weekly options expire on Mondays, Wednesdays, and Fridays, providing three trading opportunities per week.
What makes 0DTE options unique:
- Extreme time decay — Theta is at its maximum on expiration day. A $5.00 option at 10 AM might be worth $0.50 by 3:30 PM even with no price change.
- High gamma — Small price changes cause large delta swings, which is what drives GEX-based market maker hedging.
- No overnight risk — Positions are opened and closed the same day, eliminating gap risk from overnight events.
- Cash settlement — SPX options settle in cash at expiration. No assignment, no shares to manage.
Why Sell 0DTE Options?
Predicting which direction the stock market may move is a difficult task. Even the most sophisticated traders cannot tell you where the markets could be after a certain period. So, as a trader, what should be your approach?
The benefit of selling options is that you can make money even when the expected movement is small and directionally uncertain. Instead of betting on direction, you are betting on range — that the market will stay within a defined zone.
The Seller's Edge: Time Decay
When you sell a 0DTE option, time is your ally. The premium you collect erodes throughout the day as theta works in your favor. With 0DTE options, this decay is dramatic:
- 10:00 AM: Option worth $5.00 (full extrinsic value)
- 12:00 PM: Option worth $3.20 (35% decayed)
- 2:00 PM: Option worth $1.50 (70% decayed)
- 3:30 PM: Option worth $0.30 (94% decayed)
If the underlying price doesn't move past your strike, you keep the entire premium as profit.
Probability of Success
Market neutral strategies like the Iron Condor have historically shown high win rates on SPX. The key is that the strategy requires the index to trade within a range — not reach a specific price. The wider your range, the higher your probability of success (but the lower your premium collected).
0DTE Iron Condor Strategy
The Iron Condor is a market-neutral strategy that profits when SPX stays within a defined range. It involves four options trades:
How It Works
- Sell an out-of-the-money call — Above the current price (e.g., SPX at 6050, sell the 6080 call)
- Buy a further OTM call — To cap your upside risk (e.g., buy the 6100 call)
- Sell an out-of-the-money put — Below the current price (e.g., sell the 6020 put)
- Buy a further OTM put — To cap your downside risk (e.g., buy the 6000 put)
Buy 6100C ─────── Wing (protection)
Sell 6080C ────── Short call (resistance)
──── SPX: 6050 ─── Current price (profit zone)
Sell 6020P ────── Short put (support)
Buy 6000P ─────── Wing (protection)
Max Profit: Net credit received
Max Loss: Wing width - credit received
Profit Zone: 6020 to 6080 (60 points wide)
Example Trade
Suppose SPX is trading at 6,050. You expect it to trade within a 60-point range today:
| Leg | Strike | Price | Action |
|---|---|---|---|
| Long Call | 6100 | $1.20 | Buy (debit) |
| Short Call | 6080 | $3.50 | Sell (credit) |
| Short Put | 6020 | $3.80 | Sell (credit) |
| Long Put | 6000 | $1.50 | Buy (debit) |
Net credit: ($3.50 + $3.80) - ($1.20 + $1.50) = $4.60 per share = $460 per contract
Max loss: $20 (wing width) - $4.60 = $15.40 per share = $1,540 per contract
Return on risk: $460 / $1,540 = 29.9%
When to Use
- Positive GEX regime — Market makers dampening moves keeps price range-bound
- Moderate VIX (15-25) — Enough premium to collect, but not so volatile that the range breaks
- Price between Put Wall and Call Wall — GEX levels define natural boundaries
0DTE Iron Fly Strategy
The Iron Fly is a more aggressive version of the Iron Condor where both short strikes are at-the-money. This collects more premium but has a narrower profit zone.
How It Works
Buy 6075C ────── Wing (protection)
Sell 6050C ───── Short call (ATM)
Sell 6050P ───── Short put (ATM) ← Same strike!
Buy 6025P ────── Wing (protection)
Max Profit: Net credit received (larger than IC)
Max Loss: Wing width - credit received
Profit Zone: Narrow (centered on 6050)
When to Use
The Iron Fly is specifically designed for pinning scenarios:
- Price within 5-10 points of GEX PIN — Strong evidence of pinning behavior
- Positive GEX — Dealers are dampening moves, keeping price contained
- Low ATR% (<0.20%) — Price volatility is low, supporting the narrow profit zone
- Consolidation detected — 30-minute range ≤15 points confirms tight price action
- No momentum — No three consecutive same-direction candles (not trending)
Directional Spreads
When the market has a clear directional bias (not range-bound), IntelliTrade uses single-side credit spreads:
Bull Put Spread (Bullish)
Sell a put, buy a lower put. Profit when SPX stays above your short strike. Used in positive GEX when the market has upward bias. Time decay and gravity toward GEX PIN work in your favor.
Bear Call Spread (Bearish)
Sell a call, buy a higher call. Profit when SPX stays below your short strike. Used in negative GEX when the market has downward bias. Resistance from the Call Wall provides protection.
Managing 0DTE Risk
0DTE trading has an asymmetric risk profile: you can have many small wins, but one large loss can erase days of profits. Managing this risk is the difference between consistent profitability and ruin.
Key Risk Factors
- Gamma risk — 0DTE options have very high gamma. A 10-point move in SPX can flip your position from profitable to deep loss quickly.
- Breakout risk — If SPX breaks through a major GEX wall, range-bound strategies can suffer catastrophic losses.
- Liquidity risk — Late in the day, bid-ask spreads can widen, making exits more expensive.
- Pin risk — If SPX expires very close to your short strike, the outcome becomes uncertain.
IntelliTrade's Risk Framework
The system addresses these risks through multiple layers:
- Pre-entry quality gates — VIX, ATR, consolidation, momentum, and GEX regime checks filter out high-risk conditions before any trade is placed
- Dynamic exit management — 30-second monitoring with breakeven breach, GEX flip, trailing stops, and time-scaled loss cuts
- Time-decay profit targets — Capture accelerating theta by lowering profit thresholds as the day progresses
- Defined-risk spreads — Maximum loss is always known upfront (wing width minus credit)
- Minimum 30% ROR — Every trade must offer favorable risk-reward
How IntelliTrade Trades 0DTE
IntelliTrade's 0DTE SPX agent combines all the concepts from this education series into a unified system:
The Complete Flow
- GEX analysis determines the market regime and identifies key levels
- Quality gates verify conditions are favorable for the selected strategy
- Strategy selection picks Iron Fly, Iron Condor, or directional spread based on conditions
- Trade execution places limit orders through the broker API
- Exit management monitors positions every 30 seconds with dynamic rules
- AI Brain provides real-time analysis and context
- Daily summary captures lessons learned for continuous improvement
The result is a systematic approach to 0DTE trading that captures the statistical edge of time decay while managing the risks that can derail undisciplined traders.