Volume vs. Open Interest in 0DTE Options

Volume vs. Open Interest

In options trading, Volume and Open Interest (OI) are two of the most widely referenced metrics for gauging market participation.

• Volume is the total number of contracts traded during the current trading session. It resets to zero every morning.
• Open Interest is the total number of outstanding, active contracts that have not been closed, exercised, or expired.

The 0DTE Open Interest Paradox

For standard options expiring months away, Open Interest builds up over time. A strike with 50,000 OI indicates significant institutional positioning and potential hedging activity.

For 0DTE options, Open Interest can be highly misleading. Here is why:

1. OI is a lagging indicator: Open interest is only officially reported and updated by the OCC once per day, before the market opens.
2. 0DTE volume dwarfs starting OI: An SPX 0DTE strike might open the day with 5,000 Open Interest (carried over from previous days when it was a longer-dated option). However, throughout the 0DTE session, that same strike might trade 100,000 contracts in Volume.
3. End of day reset: By 4:15 PM, every single 0DTE option expires. The Open Interest for those contracts permanently drops to zero.

Why You Can’t Trade 0DTEs Based on OI

Because OI is only updated overnight, checking the OI of a 0DTE option at 1:00 PM is useless. You are looking at data from 9:30 AM. It does not reflect the massive intraday positioning that has occurred during the session.

Relying on Intraday Volume

For 0DTEs, intraday volume is the superior metric.

When traders look for “support and resistance” in the options chain, they look for strikes where massive volume is accumulating. High volume indicates that market makers are trading heavily at that strike, which forces them to hedge the underlying index, potentially creating gamma pins or volatility dampening around that price level.

Example

If the SPX is trading at 5100, and you see 75,000 volume accumulate on the 5125 Call strike by noon, you know that significant capital is betting on or hedging against a move to 5125 today. The overnight OI figure of 2,000 for that strike is completely irrelevant to the current market dynamic.