If you’re new to options, there are two strategies that are generally less likely to blow up your account than outright speculation. The first is the covered call, where you own 100 shares of a stock or ETF and sell someone else the right to buy them from you at a predetermined price. The second is the cash-secured put, where you set aside enough cash to buy 100 shares and get paid for agreeing to potentially purchase them at a lower price.
Both strategies can generate income, but things get more complicated when you move into zero-day-to-expiration (0DTE) options. Unlike weekly or monthly contracts, 0DTE options expire the same day they are traded. The rapid time decay means option sellers can often collect more premium relative to the holding period, but it also means positions require much closer monitoring. If the trade moves against you, there is far less time to adjust, roll, or wait for the market to recover.
Most 0DTE traders use index options such as SPX or NDX because they are cash-settled and avoid early assignment issues. Personally, I prefer ETFs. They’re easier for most investors to understand, can be used for both covered calls and cash-secured puts, and allow you to own an underlying asset rather than purely trading derivatives. At the moment, there are really only three major ETFs that offer robust 0DTE options markets.
0DTE Options on the Russell 2000 Index
For many investors, the iShares Russell 2000 ETF (IWM) is the most accessible starting point. The ETF tracks roughly 2,000 U.S. small-cap companies for a 0.19% expense ratio. These companies tend to be more economically sensitive and often less profitable than their large-cap counterparts, which contributes to higher volatility.
That volatility is exactly why option sellers pay attention to IWM. According to iShares, the ETF has a three-year standard deviation of 20.29%, creating larger option premiums than many broad-market alternatives. Daily-expiring contracts are available, making both covered calls and cash-secured puts possible.
The biggest advantage is the lower capital requirement. With IWM trading around $295 per share, investors need approximately $29,500 to buy the 100 shares required for a covered call. Likewise, a cash-secured put requires substantially less capital than similar trades on SPY or QQQ.
The tradeoff is that small-cap stocks can be volatile. If assigned through a cash-secured put or left holding shares after a decline, investors need to be comfortable owning the Russell 2000 through a potentially rough period, and it can get rough during a bear market or recession.
0DTE Options on the Nasdaq-100 Index
If your goal is maximizing premium income, the Invesco QQQ Trust (QQQ) is usually where traders look next. The ETF tracks the Nasdaq-100 and currently manages approximately $493 billion in assets. It is heavily concentrated in technology and growth-oriented companies, with no financial sector exposure by design.
QQQ’s higher volatility translates directly into richer option premiums. The greater uncertainty surrounding daily price movements means option buyers are willing to pay more, which benefits covered call and cash-secured put sellers. Daily-expiring options are widely available, with deep liquidity and a large number of strikes.
The downside is the capital requirement. At roughly $740 per share, investors need about $74,000 to own 100 shares for a covered call. The same amount of cash would need to be reserved for an at-the-money cash-secured put. The premiums can be attractive, but remember that higher volatility cuts both ways. Assignment risk and downside exposure are both elevated.
0DTE Options on the S&P 500 Index
The State Street SPDR S&P 500 ETF Trust (SPY) remains the king when it comes to options liquidity. With approximately $765 billion in assets under management and a launch date stretching back to January 1993, it is one of the most heavily traded securities in the world.
The key advantage here is open interest. Open interest refers to the number of outstanding option contracts that remain open. High open interest generally results in tighter bid-ask spreads, better liquidity, and easier trade execution. That matters a lot when you’re trading contracts that expire the same day. SPY’s options market is arguably the deepest available to retail investors.
The ETF itself tracks the S&P 500 and charges a 0.0945% expense ratio. One drawback is that SPY remains structured as a unit investment trust (UIT), which prevents it from reinvesting dividends internally between payout dates and creates a small amount of cash drag over time Still, if liquidity is your priority, SPY is difficult to beat.
The Bottom Line on 0DTE Options Selling
0DTE options can generate income quickly, but they require far more attention than traditional weekly or monthly contracts. The rapid time decay works in your favor as an option seller, but the reduced time to react can become a problem when markets move sharply.
For ETF investors, IWM offers the lowest capital requirement, QQQ generally offers the richest premiums, and SPY remains the gold standard for liquidity. Whichever route you choose, remember that covered calls cap your upside and cash-secured puts can leave you owning shares after a decline. Neither strategy is free money.
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