0DTE SPX Strategy: A Beginner's Guide

February 2026 • 10 min read

If you've heard traders talk about "0DTE" and wondered what all the excitement is about, you're in the right place. Zero days to expiration (0DTE) options have exploded in popularity, and for good reason: they offer unique opportunities for consistent income that longer-dated options simply can't match.

What Are 0DTE Options?

0DTE stands for "zero days to expiration." These are options contracts that expire on the same day you trade them. For SPX (the S&P 500 index), this means options that will either be worth something or expire worthless by 4:00 PM ET that same day.

Why does this matter? Time decay—the enemy of option buyers—becomes your friend when you're selling options. On expiration day, time decay accelerates dramatically. Options lose value by the minute, not by the day.

Why Trade SPX for 0DTE?

SPX options have several advantages over other instruments:

Cash Settlement

Unlike stock options, SPX options settle in cash. No worrying about being assigned shares or exercising contracts. When the market closes, you either made money or you didn't—clean and simple.

Daily Expirations

SPX offers options expiring every single trading day. This gives you opportunities Monday through Friday, not just on monthly expiration dates.

Tax Advantages

SPX options qualify for 60/40 tax treatment under Section 1256. That means 60% of your gains are taxed as long-term capital gains, even on same-day trades.

Liquidity

SPX options are among the most liquid in the world. Tight bid-ask spreads mean you're not giving up edge just to enter or exit positions.

The Core 0DTE Strategy: Premium Selling

The most consistent approach to 0DTE trading is selling premium—taking the other side of traders who are buying options hoping for a big move.

Here's why this works:

1. Time is on your side. Every minute that passes, options lose value. As the seller, that decay goes into your pocket.
2. Most options expire worthless. Studies show roughly 70-80% of options expire out of the money. Selling puts the probabilities in your favor.
3. Defined risk with spreads. By selling spreads (a sold option plus a bought option for protection), you know your maximum loss before entering the trade.

Example: Selling a Put Credit Spread

Let's say SPX is trading at 5,800 at 10:00 AM. You believe the market won't drop significantly by the close.

You could:

• Sell the 5,750 put (collecting premium)
• Buy the 5,745 put (limiting your risk)

If SPX stays above 5,750 at the close, both options expire worthless and you keep the entire premium. If SPX drops below 5,750, your maximum loss is $500 (the $5 spread width × 100) minus the premium collected.

When NOT to Trade 0DTE

Not every day is a good day for 0DTE trading:

• FOMC days: Federal Reserve announcements create unpredictable volatility
• Major economic reports: CPI, jobs reports, and GDP releases can whipsaw markets
• Large overnight gaps: When the market gaps significantly, ranges become unreliable
• Low volatility days: If premium is too cheap, the risk/reward doesn't work

The best 0DTE traders know when to sit out. Preserving capital on bad days is just as important as making money on good days.

Getting Started with 0DTE SPX

If you're new to 0DTE trading, start here:

1. Paper trade first. Most brokers offer simulated trading. Use it until you're consistently profitable.
2. Start small. One contract at a time. There's no rush.
3. Define your risk. Always use spreads to cap your potential loss.
4. Pick a strategy and stick with it. Don't jump between approaches. Master one thing.
5. Journal everything. Track your trades, your emotions, and market conditions. Patterns will emerge.

The A Trade or Two Approach

At A Trade or Two, we focus on high-probability setups using SPX, XSP, and ES futures options. Our philosophy is simple: consistent base hits over home runs.

We use market gamma measurements, supply and demand analysis, and price action to identify trades where time decay works in our favor. We're not trying to predict where the market will go—we're identifying where it probably won't go, and selling premium around those levels.

The result? A methodical, low-stress approach to options income that doesn't require you to watch screens all day or make split-second decisions.

Disclaimer: Options trading involves significant risk of loss. Past performance does not guarantee future results. This content is for educational purposes only and should not be considered financial advice.