Introduction
If you're entering the fast-moving frame of options trading on the NSE, then focusing on 0DTE options can bring a different excitement and thrill to your portfolio. You may ask yourself, What does the 0DTE option mean? These are zero DTE options, or contracts that expire the same day you trade them. They provide short time durations but require intense concentration. In the volatile markets of India, there will be many weekly expirations like the Nifty 50 and Bank Nifty. By trading a 0DTE option, you are engaging in a position that will expire that session, making it easy to capture intraday volatility, as there is no overnight risk.
To understand 0DTE options
At its simplest, 0DTE means zero days to expiration, making options a risky, same-day bet. You will either buy or sell these contracts knowing they will cease to exist at day's end, given the time decay also known as theta. Unlike longer-dated options, 0DTE options amplify price swings in underlying assets like indices or stocks. The 0DTE opportunities in India happen nearly every trading day, Nifty, Bank Nifty, or FINNIFTY - now have staggered expiries during the week (Mon-Fri). This setup lets you react to real-time events, from corporate earnings to policy announcements, without overnight risks.
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Getting Started with 0DTE Trading
You should ensure a reasonable foundation as a first step in trading 0DTE options. First, ensure you have an options-approved trading account, which means disclosing some information about your experience, finances, and risk horizons to your broker. You should also consider adding some more cash than you need to the trading account. In India, SEBI margin rules require more upfront margin when selling options, so leverage is less than in the US markets. In India, 0DTE trades can typically only be done on indices such as Nifty, Bank Nifty, and FINNIFTY, because stock options only have monthly expiries. 0DTE Trading focuses considerably on speed. Therefore, we suggest trading through demo platforms first so that you can practice making intraday trades. Speed has to be fast; every minute matters.
Key 0DTE Options Strategies
Having a strategy is very important in 0DTE options trading. One common strategy among traders is premium selling. In this case, you will sell either calls or puts with a firm belief that you will take advantage of theta decay to cause value to erode quickly. For example, if you think Nifty will be range-bound through the day, option selling can create regular and consistent small profits, but if Nifty moves sharply outside your range, your loss amount will be substantial. Consider buying a 0DTE strategy if you want to have strictly defined risk. You can purchase cheap options, betting solely on a defined volatility spike, with the most you can lose being the premium you paid. Combine with spreads like iron condors to hedge your position in 0DTE Trading and focus on small profits. As with any market transaction, you will want to ensure your position is based on the market's sentiment; ideally, you would position yourself using technical indicators such as the RSI or Bollinger Bands. As soon as you've gained enough to allow you to exit the trade, you want to exit. The goal is to lock in profits before closing positions.
Practical Examples in Indian Markets
Imagine this scenario: It is a Nifty expiry on Thursday, and the index is trading at 24,000, just before the budget speculation. Due to low volatility, you sell the 24,200 calls at a premium of ₹50 using a 0DTE Strategy. If Nifty closes below that, you will receive the whole amount through decay. However, if Nifty goes to 24,300, your loss will accumulate quickly, hence the need for hedges.
On the contrary, you expect the rate to correct, so you buy cheap at-the-money puts. At some point in the day, if it dips by 200, that's triple your investment; it may be just intraday.
These scenarios exhibit an example of the opportunities to trade 0DTEs amongst the prospects offered by the NSE. Additionally, with incredible liquidity in Bank Nifty options, there are even more opportunities in the Indian options market.
Conclusion
Knowing how to trade 0DTE options gives you strength as a trader to find daily opportunities without commitment to long positions. It builds your confidence and skills in navigating the volatility profile, while also supporting other strategies you may have. At Motilal Oswal, you can use these insights and tools to develop your trading capability in 0DTE options, using the discipline and speed to create better outcomes.
You should start with a small option exposure and learn from every trading session. Over time, your trading behaviour will evolve, as in traditional models. 0DTE could be your ticket to finding opportunities for superior benefits in the market during 2025.