On March 7, 2024, Roundhill Investments launched the first 0DTE (zero days to expiration) covered call exchange-traded funds (ETFs). These funds introduce new strategies to the ETF space, enabling fund managers to respond to rapidly changing markets with greater speed and agility.
0DTE trading involves buying or selling put options when the market opens; those contracts expire when the market closes that same day.
Using 0DTE enables traders of these ETFs to respond to market changes quickly. Strike prices for the sold calls are reset daily. Additionally, the ETF’s underlying asset will be “uncovered” overnight, preventing unexpected news from negatively affecting a covered call position while the market is closed.
This post originally appeared at Investors Alley.