The American economy is often described through its aggregate performance: how quickly gross domestic product is growing, whether unemployment is rising, how the stock market is performing and whether inflation is moving toward the Federal Reserve’s target. These measurements matter. They help policymakers assess economic health and businesses make investment decisions. But they do not fully answer a more consequential question: Who has the power to determine how the economy’s gains are distributed, and who has the resources to withstand its losses?

A massive ~66% of S&P 500 options volume now expires within a single day, giving short-term trading flows an increasingly powerful influence over market movements.

Since 2024, option traders have increasingly bought calls and sold puts during market declines, then reversed those positions during rallies, effectively buying dips and selling strength.

This counter-trend activity helps suppress volatility, with its impact now outweighing the effects of options dealers adjusting their hedges.

The result is a self-reinforcing dynamic in which options flows help limit S&P 500 moves in both directions, alongside the stabilizing effect of positive dealer gamma positioning.

Furthermore, 0DTE options trading now represents a larger volume of market exposure than the average daily trading volume of E-mini S&P 500 futures, highlighting how short-term options activity increasingly influences broader stock market movements.

However, the pattern could reverse sharply if downside market fears intensify and traders begin aggressively buying puts, which will materially amplify a selloff rather than contain it.

0DTE options that dampen volatility today could amplify the next market downturn creating events like 1987, 2017 and 2024

Source: UBS Derivatives Strategy

Link : https://www.bloomberg.com/news/articles/2026-10-25/zero-day-option-traders-are-betting-against-big-s-p-500-swings