How 0DTE Options Can Explain Market Movement

Subscribers to Chart of the Week received this commentary on Sunday, March 22.

Over at our Substack, The Contrarian Edge, we spent last week making connections between March Madness brackets and stock trading. This week, we’re on to the second round, with commentary about the Round of 32 matchups.

But first, let’s talk options volume.

Every year, I expect there to be a drop-off in options volume, and every year I’m proven wrong. 2025 was a sixth-straight record-breaking year, with volumes up 24% from 2024, per our friends at Cboe Global Markets. Volume reports for January and February show a continuation of this trend in 2026.

The standout story for early 2026 is the continued dominance of 0DTE (zero days to expiry) options. The 63% share of SPX volume attributed to 0DTE in February is itself a new record, per Nasdaq.com, continuing a trend that has reshaped how traders use options — from longer-term hedging vehicles to near-daily tactical instruments.

All of this is a long way of saying that there’s never been a better time to get familiar with the ins and outs of options trading. And what better way to do that than equating it with one of the most ubiquitous events in Americana, March Madness?

But first, a quick sidebar.

Last week, Senior V.P. of Research Todd Salamone called out the SPDR S&P 500 ETF Trust’s (SPY) 655 strike on Wednesday, a follow-up from the put open interest observations he made in his Monday Morning Outlook about standard March expiration. Sure enough, that strike was the second-most active 0DTE on Wednesday.

The SPY low that was 655.17, just above those Oct and Nov lows Todd referenced. SPY steadied itself that day thanks in large part to a combination of chart support and unwinds of shorts related to that 0DTE volume, and to smaller extent the March 655-strike put open interest.

It was a real-time example of how 0DTE is impacting the market, and an ongoing reminder that checking the options tape can sometimes dictate your short-term risk appetite. Once the dust settles from quadruple witching, I’ll be sure to check the activity and see what takeaways it brings.

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Schaeffer’s Market Madness, Round of 32

I’m going to really let the word ‘supporting’ do the heavy lifting here. UAL is within 3% of its 12-month moving average, after closing above this trendline for the past five months. Per Schaeffer's Senior Quantitative Analyst Rocky White, this signal has occurred 12 times during the last 20 years, after which the stock was higher three month later 75% of the time with an average 17.1% gain.

Click Here to view the rest on Schaeffer’s Substack!