Can you trade 0DTE Options in the UK?
Yes, you can trade 0DTE options in the UK by trading normal options on the same day they expire or by having a professional trading account.
Zero-day options, or ‘0DTE’ for short, have become popular trading instruments in recent years. Today, they account for around half of the S&P 500’s total options volume – a ten-fold increase on the figure in 2016.
In this guide, we are going to look at how zero-day options work and discuss their pros and cons. We’ll also look at how traders can access them in the UK.
Where can you trade zero-day options in the UK?
In the UK, options trading is not as big as it is in the US. And currently, it’s not possible to trade options on a lot of major UK investment platforms. However, there are a few UK brokers that provide access to these financial instruments. Robinhood, IG, Charles Schwab, Saxo, and Interactive Brokers are some examples of brokers that do offer options trading in the UK.
Brokers that offer access to 0DTE options in the UK include:
- IG – IG offers access to US-listed options and futures.
- Interactive Brokers – With Interactive Brokers, you can choose from four levels of options trading permissions to find choices that are aligned with your options trading strategies.
- Saxo – Saxo offers access to options on stocks, indices, interest rates, futures and commodities.
0TDE options trading in the US is much more popular, and there are more brokers that offer the product.
What are zero-day options?
Zero-day options are options contracts that expire on the same day that they are traded. They work in a similar way to regular options, which are contracts that give traders the right, but not the obligation, to buy or sell a specified amount of an underlying asset at a predetermined price by a certain date.
With zero-day options trading, traders aim to profit from rapid price changes as options contracts approach their expiration. By entering and exiting positions within the same day, traders can potentially capitalise on small price movements in different securities.
It’s worth noting that a 0DTE option could be a longer-term option that has reached the last day of its lifecycle, or it could be a specific option that’s listed only for a single day. In the US, 0DTE options are issued every day from Monday to Friday on indexes such as the S&P 500 and the Nasdaq.
The pros and cons of trading 0DTE options
Like any trading strategy, trading 0DTE options has its pros and cons. Understanding these pros and cons is important and can help you decide if the trading strategy is right for you.
One of the main advantages of trading 0DTE options is that there’s potential for quick returns. With these options, traders can generate returns within hours or even minutes by capitalising on short-term price movements in different securities.
Another advantage is that there’s no overnight risk exposure. With these instruments, there can be a sense of security knowing that your positions will be closed at the end of the trading day.
0DTE options are also often cheaper to buy than longer-dated options. This is because time-to-expiration is a variable that affects option pricing.
On the downside, there is potential for rapid losses with 0DTE options trading. As these options approach their expiration date, their value decreases exponentially.
It’s worth pointing out here that options that are not profitable at their expiration date tend to expire worthless. So, 100% losses are very common with this strategy.
The lack of time until expiration also forces traders to make decisions quickly. This can increase stress and pressure, especially for those who are inexperienced.
How are zero-day options used by traders?
0DTE options are a versatile tool that can be used in a range of scenarios. However, the main way they are used today is to speculate on short-term price movements in stocks.
Often, traders buy 0DTE options in the hope that they can quickly profit from a last-minute swing in price. Due to their short lifespan, these options are highly sensitive to price movements in the underlying assets, and they can produce explosive gains if traded successfully.
Zero-day options trading example
For example, let’s say there’s a stock that is trading for $20, and you believe that it is going to rise that day. You can purchase a $20 call 0DTE option on the stock for $0.10 (1 contract is 100 shares).
Given that you are bullish on the stock, you decide to buy 10 contracts. So, the total cost of the options trade is $100.
The table below shows a few different scenarios.
| Stock price | Option value | Total profit | Stock gain/loss | Option gain/loss |
| $19.00 | $0 | -$100 | -5% | -100% |
| $20.00 | $0 | -$100 | 0% | -100% |
| $20.10 | $100 | $0 | 0.5% | 0% |
| $21.00 | $1,000 | $900 | 5% | 900% |
If the stock ends the day at $20 or below, you lose the entire $100. However, if the stock rises above $20.10, you can potentially generate big gains. For instance, if the stock rises 5% to $21, you generate a gain of 900% on your options. These rapid gains are what traders of zero-day options are hoping for (these types of gains often don’t materialise though).
What are some alternatives to zero-day options?
There are lots of alternatives to zero-day options if you’re looking to capitalise on small price movements on specific securities. These include:
- Leveraged ETFs – These are ETFs that offer leveraged exposure to stocks or indexes. They are offered by companies such as Leverage Shares and ProShares and available on platforms such as Hargreaves Lansdown and Trading 212.
- CFDs – CFDs (Contracts for Difference) are trading instruments that allow you to capitalise on the price movements of specific securities without owning the underlying securities. With these instruments, you can use leverage to increase the size of your trade.
- Spread bets – Spread bets are similar to CFDs in that they allow you to make leveraged bets on specific securities without owning the underlying securities. One difference, however, is that profits are not subject to tax.
Why are 0DTE Options a so popular?
Zero-days-to-expiry options, have become one of the biggest trends in derivatives trading.
I was at a presentation about options trading with the Cboe and they told us that around 60% of S&P 500 SPX options trading is now in contracts that expire that same day
As the Cboe presenter explained:
“At this point, about 60% of options are 0DTE.”
So why have traders become so interested in options that have only a few hours left before they expire?
The biggest attraction is precision.
A trader can use a 0DTE option to take a view on what will happen to a market over the next few hours without paying for weeks or months of additional time value.
This can make them useful around specific market-moving events such as inflation figures, Federal Reserve announcements, employment reports and other news.
They’re also used for short-term hedging.
An investor with a much larger long-term portfolio could potentially use a same-day put option to protect against the risk of a sharp market fall surrounding a particular event.
Cboe’s presentation highlighted a broader shift towards shorter-dated trading, saying:
“There’s been a shift… towards shorter-dated and 0DTE options.”
Why are 0DTE options so risky?
The feature that makes 0DTE options attractive is also what makes them particularly risky.
There is virtually no time for the trade to recover if you’re wrong.
Option prices can change extremely rapidly as the underlying market moves and expiry approaches.
Time decay – known as theta – also accelerates as an option gets closer to expiry.
For an option buyer, that means the option can lose value extremely quickly if the expected market move doesn’t happen.
An option that is out of the money at the end of the session can simply expire worthless, leaving the buyer with a 100% loss of the premium paid.
Options close to the money can also become extremely sensitive to relatively small movements in the underlying market as expiry approaches.
This makes 0DTE options very different from simply buying a share and waiting for your investment thesis to play out.
With a 0DTE trade, the trader needs to be right about both direction and timing.
Are 0DTE options just for retail traders?
No.
One of the interesting points from Cboe’s presentation was the extent to which sophisticated institutional traders use complex options strategies.
The Cboe said:
“About 50% of institutional flows are complex orders.”
Institutional investors can use short-dated options for hedging, volatility trading and highly specific market exposures, while retail traders may use them for directional speculation and defined-risk strategies.
The growth of 0DTE trading therefore shouldn’t simply be interpreted as a surge in day trading by retail investors.
Can 0DTE options cause a stock market crash?
This has become one of the biggest concerns surrounding their growth.
Because market makers may hedge their options exposure by buying or selling the underlying market, some investors worry that enormous volumes of same-day options could amplify intraday market moves.
However, the Cboe presentation argued that the structure of current options activity reduces the potential for destabilising feedback loops.
The presenter concluded that despite rapidly growing options volumes:
“The cash structures are limiting the potential for short gamma squeezes.”
That doesn’t mean 0DTE options are harmless.
They remain highly leveraged, extremely short-term instruments where prices can change dramatically within minutes.
But their growing popularity reflects a wider change in how traders use derivatives.
Options trading used to be dominated by contracts measuring their lives in weeks and months.
Increasingly, traders want to express a view on what the market will do today.
And 0DTE options let them do exactly that.
0DTE options: a high-risk game
In summary, there is potential for quick financial gains with zero-day options trading. But there is also potential for rapid losses, so it’s a risky strategy.
Due to the high level of risk associated with options, most experts do not recommend pursuing options trading strategies. Experts are far more likely to recommend a long-term approach to investing, such as investing in index funds or ETFs.
Richard is the founder of the Good Money Guide (formerly Good Broker Guide), one of the original investment comparison sites established in 2015. With a career spanning two decades as a broker, he brings extensive expertise and knowledge to the financial landscape.
Having worked as a broker at Investors Intelligence and a multi-asset derivatives broker at MF Global (Man Financial), Richard has acquired substantial experience in the industry. His career began as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson), following internships on the NYMEX oil trading floor in New York and London IPE in 2001 and 2000.
Richard’s contributions and expertise have been recognized by respected publications such as The Sunday Times, BusinessInsider, Yahoo Finance, BusinessNews.org.uk, Master Investor, Wealth Briefing, iNews, and The FT, among many others.
Under Richard’s leadership, the Good Money Guide has evolved into a valuable destination for comprehensive information and expert guidance, specialising in trading, investment, and currency exchange. His commitment to delivering high-quality insights has solidified the Good Money Guide’s standing as a well-respected resource for both customers and industry colleagues.
