0DTE contracts surge amid wild market swings; Ackman warns of leverage danger
A surge in ultra-short-term options trading is fuelling unprecedented volatility across Wall Street, as traders scramble to profit—or protect themselves—from a market gripped by geopolitical shocks and policy whiplash.
Trading volume in zero-day-to-expiration (0DTE) options tied to the S&P 500 has soared to 8.5 million contracts in April, a 23% rise since the start of the year. These contracts, which expire the same day they’re traded, now make up roughly 7% of total U.S. options market activity, according to JPMorgan.
Their rise comes at a time of extreme intraday price swings triggered by the Trump administration’s tariff reversals, exemptions, and reimpositions. Since the president’s “Liberation Day” tariff package on April 2, equity markets have lurched between losses and gains, including a 1,500-point two-day plunge in the Dow—the first such event in history—and one of the strongest single-day S&P 500 gains since World War II.
Volatility at crisis levels
Intraday volatility in the S&P 500 reached 44% last week, surpassing the COVID-era peaks of 2020 and approaching levels last seen during the 2008 financial crisis, according to Cboe Global Markets. Analysts say 0DTE options are playing an outsized role in driving these swings.
Unlike traditional options with longer expiry dates, 0DTEs offer high leverage and instant exposure to price moves. As investors pile into them, dealers and market makers are forced to hedge rapidly by buying or selling the underlying assets—often exacerbating volatility rather than dampening it.
Ackman joins critics of short-term leverage
The rise of 0DTE options has attracted criticism from high-profile investors. In a series of posts on X, billionaire hedge fund manager Bill Ackman questioned the societal value of hyper-leveraged financial products like 3x ETFs and 0DTEs.
“How have 3X leveraged ETFs and Zero Days to Expiration (0DTE) options advanced society or contributed to our economy?” Ackman asked his 1.7 million followers.
He warned that excessive leverage in both equities and fixed-income markets risks making financial markets “increasingly unreliable as short-term indicators of the impact of policy changes.”
Ackman’s comments follow record inflows into high-leverage funds such as TQQQ, a triple-leveraged tech ETF, which took in over US$2.3bn last week. Meanwhile, some of the most volatile instruments—such as leveraged crypto ETFs—have posted losses of over 80% this year.
A tool for all traders—or a ticking time bomb?
While zero-day options were once almost exclusively used by institutions, they are now widely accessible to retail traders via platforms like Robinhood. This democratisation of options trading has led to growing concern about uninformed risk-taking—but also to debate about freedom and responsibility.
Even defenders acknowledge that these instruments, if misused, can introduce systemic risk—especially in a market as jittery as the one navigating Trump’s tariff shocks and global trade disruptions.