Market makers quote bid and ask prices in 0DTE options and adjust those quotes as underlying price, implied volatility, and order flow change. Their primary goal is not to “bet” on direction but to manage inventory and hedge risk.
Inventory and Hedging
- They may be long some strikes and short others at the same time.
- They hedge with the underlying or with other options across expiries.
- They focus on net Greeks (delta, gamma, vega, theta).
On 0DTE days, hedging can become more frequent because gamma is high and deltas change quickly.
What Retail Traders See
To a screen-based trader, market maker adjustments appear as changing spreads and shifting mid-prices. Tight spreads usually indicate active competition; wide spreads often show uncertainty or low interest.
Understanding how liquidity providers behave can help you choose which strikes to trade and which parts of the day to avoid when spreads are unstable.