As various investors brace for artificial intelligence profits, geopolitical tensions and interest rate decisions to either lift equities to record peaks or plunge them into chaos, a growing cohort of zero-day options traders has been wagering that the S&P 500 Index will stay subdued.
An examination of 0DTE options activity by UBS Group AG derivatives strategist Kieran Diamond reveals a significant trend: tactical traders are purchasing calls and offloading puts when the market falls, and doing the reverse when it climbs. The combined result of what they call a "counter-trend delta bias" amounts to buying at lows and selling at highs, which additionally curbs fluctuations in the S&P 500.
Options that expire the same day have become disproportionately influential in the daily movements of this equity benchmark, with roughly 66% of total volume expiring within a single day, according to Garrett DeSimone at OptionMetrics. This has heightened attention on short-term positioning as both individual and institutional traders look for clues on how options flows are shaping the $66 trillion US benchmark index.
"This counter-trend trading pattern seems to be a response to very rangebound markets," Diamond said. "The magnitude of these options flows means that this can start to look self-fulfilling, with options investors helping to limit price moves in either direction."
This intraday tactical change since 2024 is noteworthy, featuring larger volumes on smaller movements, which helps constrain S&P 500 realized volatility. The pattern mirrors the stabilizing impact of positive gamma, as traders purchase during declines and sell during advances, similar to option dealers who hold long gamma and likewise buy drops and sell rallies to maintain delta-neutral positions.
The counter-trend trading inclination is one element that has helped keep movements in check. Another is the long option-dealer gamma environment frequently observed in the S&P 500, largely driven by the common practice of a major institutional trader selling one-day iron condors — a combination of a put spread and a call spread.
The expansion of 0DTE counter-trend trading flow is now so substantial that its net effect surpasses the influence of option dealer re-hedging, according to UBS.
Certainly, this pattern could shift if the market experiences a prolonged selloff, going beyond the AI-related declines that drove the S&P 500 down 1.2% on Thursday.
"While the counter-trend flow has so far been very consistent, there's nothing to stop this dynamic reversing in a period of higher volatility," Diamond said. "If 0DTE investors decide to instead chase a move lower by buying puts, then their flows could exacerbate the move, and also leave market makers managing short gamma risks."
Although the effect on the S&P 500 has been to dampen movements, some short-term trading in the technology sector, for example, has produced the opposite outcome. This has led to successful intraday momentum strategies where flows tend to intensify rallies and declines.
"Dealer hedging associated with 0DTE options can reinforce intraday momentum or contribute to mean reversion, depending on the prevailing gamma environment," said Adrien Geliot, chief executive officer of Premialab. "We saw strong performance from semiconductor-focused intraday momentum strategies during the April–June rally, while the current interest in SPX reversal signals highlights how these dynamics can differ across market conditions."
He added that the number of active strategies for that segment in Premialab's QIS database has risen 50% since the end of March 2025.
"The key challenge is translating these signals into strategies that can capture these effects consistently, while accounting for execution costs," Geliot said.
Broadly, the appetite for option positioning insight is expanding, with more retail platforms joining the field and offering market context. Each employs its own approach to chart intraday option Greeks — the gamma, vanna and charm metrics that indicate how traders and dealers might need to respond — with the goal of providing an advantage to market speculators.
The surge in 0DTE trading has only amplified the significance of positioning as a crucial technical force behind intraday price movements. The delta-adjusted notional value in the S&P 500 option complex now readily exceeds the average daily volume in E-Mini futures — a signal that the options "tail" is occasionally wagging the stocks "dog."
Improved data availability and client demand for insight have prompted some institutional providers to sharpen their approximations of net dealer positioning. While initial models typically presumed that all calls were sold by end clients and all puts were purchased, more recent models are more advanced.
JPMorgan Chase & Co. derivatives strategists recently noted that they have shifted from a proxy for S&P 500 gamma positioning based on open interest to a more flow-oriented method using Cboe Global Markets Inc. data that offer a detailed breakdown of whether each option transaction was bought or sold by clients.