Popular ‘zero-day' options saw record share of trading volume in May as retail traders piled in

Trading volume in S&P 500-linked options contracts with zero days to expiration (0DTE) reached a record high in May, comprising over 60% of the S&P 500 options complex volume, according to Cboe Global Markets data. This surge occurred even as overall options-market activity eased, and was largely attributed to increased participation from retail investors, signaling continued strong interest in this high-risk, high-reward strategy.

Analysis

Trading in S&P 500-linked options contracts with zero days to expiration (0DTE) achieved a significant milestone in May, with their share of trading volume surging to a record high of over 60% within the S&P 500 SPX complex, according to data from Cboe Global Markets. This development is particularly noteworthy as it occurred against a backdrop of easing overall options-market activity during the same month. The pronounced increase in 0DTE volume was substantially driven by heightened participation from retail investors, indicating robust and growing interest in these highly speculative, short-duration strategies. The growing dominance of 0DTE contracts points towards evolving market dynamics and potentially increased intraday volatility, reflecting a structural shift influenced by accessible, high-frequency trading opportunities.

Key Decisions for Investors

• Investors should anticipate potentially heightened intraday volatility in the S&P 500, particularly near market open and close, given the record concentration of 0DTE options activity.
• Consider the amplified impact of retail investor sentiment and flows on short-term market movements, as 0DTE contracts now constitute a majority of S&P 500 options volume.
• For those tracking Cboe Global Markets (CBOE), while increased 0DTE volume is a positive driver for trading revenues, the concentration in such short-dated, speculative instruments warrants monitoring for sustainability and potential regulatory attention.