Each earnings season, a cohort of traders compresses the ancient gamble of conviction into a single trading day, wagering on zero-days-to-expiration options that live and die with one company's quarterly report. These instruments strip away the comfort of time, leaving only the raw directional bet — a wager that a stock will move far enough, fast enough, before the closing bell. The AbbVie earnings of October 31st offered a vivid parable: one side of the trade returned 122% in hours, the other returned nothing at all. In this arena, the market does not reward being approximately right.
0DTE Options on Earnings: High-Leverage Trades With Outsized Risks and Rewards
Everything rides on that one trading session.
Mark
So these 0DTE options—they're just regular options that happen to expire the same day as earnings?
Mimi
Exactly. They're weekly options that expire on Friday, and if a company reports earnings that same Friday, you've got a single trading session to be right about direction.
Luke
But that's not unique to 0DTE, right? You could buy a regular weekly option any time. What makes this different is the timing—the event and expiration align.
Mimi
Right. And because there's no time left, the option is almost pure intrinsic value. You're not paying for volatility or time decay working in your favor.
Mark
So in the AbbVie example, the put trader made 122% in 24 hours. That's the upside. What's the downside?
Mimi
The call buyer lost everything. The entire premium. The stock didn't move enough in that direction, so the call expired worthless.
Luke
And we should be clear—that 122% return assumes the trader actually sold at the settlement price. If liquidity dried up or the bid-ask spread widened, the actual return might have been different.
Mimi
Fair point. And the call buyer's loss was total—there was no recovery period, no time for the stock to bounce back.
Mark
Why would anyone do this if the downside is total loss?
Mimi
Because the upside can be enormous, and it happens fast. Some traders have high conviction about earnings outcomes and want concentrated exposure.
Luke
Also, the defined risk appeals to people. You know exactly what you can lose—it's the premium you paid. You can't lose more than that.
Mark
But you also can't win unless the stock moves far enough. That's the trap, isn't it?
Mimi
Exactly. A small move in your direction isn't enough. The stock has to move enough to overcome the cost of the option, and it has to do it before market close.
Luke
And the source recommends paper trading first. That's important—these aren't theoretical trades. They move fast and they're unforgiving.
Il Polso
- 0DTE options have surged in popularity as traders seek maximum leverage during earnings catalysts, compressing months of potential movement into a single session.
- The binary stakes are unforgiving — AbbVie's 4.5% drop on earnings day turned a $4.20 put into a $9.35 payout, while the opposing call position evaporated to zero in the same hours.
- Unlike standard options, 0DTE contracts carry almost no time value or volatility premium, making them pure directional instruments with no margin for error or recovery.
- Selling these contracts near earnings amplifies the danger exponentially, exposing traders to potentially unlimited losses — a risk profile suited only to institutional players with deep reserves.
- Retail traders are being urged toward paper trading first, as the strategy demands not just a correct directional call but precise timing and disciplined execution to avoid total capital loss.
Each earnings season, a cohort of traders compresses the ancient gamble of conviction into a single trading day, wagering on zero-days-to-expiration options that live and die with one company's quarterly report. These instruments strip away the comfort of time, leaving only the raw directional bet — a wager that a stock will move far enough, fast enough, before the closing bell. The AbbVie earnings of October 31st offered a vivid parable: one side of the trade returned 122% in hours, the other returned nothing at all. In this arena, the market does not reward being approximately right.
Every earnings season, a particular breed of trader wakes up with a single-day window to make a bet — not on the company's future, but on the next few hours of its stock price. Zero-days-to-expiration options, or 0DTE, are contracts that live only as long as the trading session itself. When earnings drop, the stock moves sharply in one direction, and the option either delivers an outsized return or expires worthless. There is no recovery window, no second act.
The appeal is the leverage. A modest move in the underlying stock can translate into enormous percentage gains on the option premium. But that same leverage is merciless in the other direction. The AbbVie earnings of October 31st illustrated this with unusual clarity. With the stock trading at $228.20 the night before, a trader could buy the $227.50-strike put for $4.20. When AbbVie fell 4.5% on earnings day, that put settled at $9.35 — a 122% return in under 24 hours. The trader who took the other side, buying the $230-strike call at $3.65, lost every dollar of premium as the stock never approached the breakeven level.
What separates 0DTE from conventional options is the near-total absence of time value. Standard options carry a premium for the possibility that time and volatility will eventually work in a trader's favor. With same-day contracts, that cushion is gone. The trade becomes a pure directional wager — not on volatility, not on probability distributions, but on where the stock will be in hours. The defined risk of buying these contracts is their one structural mercy: a trader can lose no more than the premium paid. Selling them, however, opens the door to unlimited losses, which is why that side of the trade belongs almost exclusively to institutional players.
For those drawn to this strategy, the recommended entry point is paper trading — simulated practice that builds familiarity with how quickly these contracts move and how little room they leave for hesitation. The mechanics reward precision and punish approximation with equal and immediate force.
Every earnings season, a particular breed of trader wakes up with a single-day window to make a bet. They're not buying stock. They're buying options that expire the same day the company reports—contracts that live for a few hours, sometimes less, and either deliver outsized returns or vanish entirely.
These are zero-days-to-expiration options, or 0DTE. The mechanics are straightforward: a trader buys a call or put on a stock whose weekly options expire the same day earnings drop. Everything rides on that one trading session. The earnings announcement is the catalyst. The stock moves sharply up or down. The option either prints money or becomes worthless. There is no middle ground, no time for recovery, no second act.
The appeal is real. Options trading volumes have climbed steadily in recent years, and 0DTE setups have become a standard tool for active traders seeking concentrated exposure during high-stakes events. The leverage is extreme—a small move in the stock can translate into a massive percentage gain on the option premium. But that same leverage cuts the other way. A miscalculation, a move that doesn't materialize, or a directional bet that lands on the wrong side of the stock's actual move can wipe out the entire investment in a single session.
Consider what happened with AbbVie on October 31st. The company released its third-quarter earnings before the market opened that Friday, the same day its weekly options expired. At Thursday's close, AbbVie stock was trading at $228.20. A trader looking for downside protection could buy the $227.50-strike put for $4.20—a bet that the stock would fall below that level. The options market was pricing in an expected move of roughly 2.1% to the downside based on that put's cost. When earnings hit, AbbVie fell 4.5%, sliding to $218 by market close. That $227.50 put, which cost $4.20 the day before, settled at $9.35. A trader who bought it ahead of the report pocketed a gain of $5.15 per contract—a 122% return in less than 24 hours.
But the bullish side of that same trade tells a different story. A trader who bought the $230-strike call at $3.65, betting on upside, lost the entire premium. The stock never came close to that breakeven level of $233.65. The call expired worthless. This is the binary nature of earnings: one direction wins decisively, the other loses completely.
What makes 0DTE trades different from longer-dated options is the absence of time value. A standard option's price includes both intrinsic value—what the option is worth right now based on the stock's current price—and extrinsic value, the premium paid for the possibility that time and volatility will work in your favor. With 0DTE contracts, there is almost no extrinsic value left. The option trades almost entirely on intrinsic value. This means implied volatility, which normally plays a central role in options pricing, becomes nearly irrelevant. A 0DTE trade is not a bet on volatility. It is a pure directional bet on where the stock will be in hours, not days or weeks.
For traders with high conviction about an earnings outcome, this structure offers clarity and defined risk. If you buy a call or put, your maximum loss is the premium you paid. You cannot lose more than that. You also cannot win unless the stock moves far enough and fast enough to overcome the cost of the option. There is no room for the stock to move a little in your direction and still be profitable. It has to move enough. And it has to move before the market closes.
The risk profile flips entirely if you sell these options. Selling short-term contracts, especially naked positions in individual stocks around earnings, exposes you to unlimited losses if the stock gaps sharply against you. A stock that moves 4.5% in one direction can wipe out a seller's position in minutes. This is why selling 0DTE options is largely the domain of institutional traders with deep capital reserves and sophisticated risk management. For retail traders, it is neither practical nor recommended.
For those new to this strategy, the path forward is paper trading—practicing with simulated money before committing real capital. The goal is not just to spot winning trades, but to understand how these contracts behave in real time, how quickly conditions change, and what separates a well-executed idea from one that simply ran out of time. The mechanics of 0DTE trading reward precision, timing, and discipline. They also punish hesitation and miscalculation with equal force.
Citazioni salienti
A trader who bought the $227.50 put ahead of the report pocketed a gain of $5.15 per contract—a 122% return in less than 24 hours.— Analysis of AbbVie earnings trade
For most retail traders, selling unhedged, near-expiration contracts is neither practical nor recommended.— Source guidance on short-term options selling
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Economy & Finance