Notes · Aug 19, 2026

Dow Climbs 120, Nasdaq Adds 41, SPX Rises 16

Educational only. Not investment advice. Not a trade recommendation.

Understanding the Impact of a Rising Market on 0DTE Options Structure

A strong market open, such as the one indicated by the Dow climbing over 100 points, the Nasdaq adding over 40 points, and the S&P 500 rising, can significantly influence the structure of 0DTE options. When the market is rising, dealer gamma, which is the rate of change of the delta of an option, tends to decrease as the market moves away from the gamma flip level. This decrease in gamma can lead to a decrease in the expected move, as dealers are less likely to hedge their positions, resulting in reduced volatility.

In a scenario where the SPY is pinned just under a call wall, a rising market can cause the call wall to become more significant, as it represents a level where dealers are likely to be short gamma. If the market continues to rise and breaks through the call wall, dealers will need to hedge their positions, leading to increased buying pressure and potentially accelerating the move upwards. On the other hand, if the market fails to break through the call wall, it may indicate that the upside is limited, and the market may reverse.

For more information on how dealer gamma and volatility regimes impact 0DTE options, visit the options market structure explainer to gain a deeper understanding of these concepts and how they apply to trading decisions.

Expected Move and Volatility Regime

The expected move, which is a measure of the potential price movement of the underlying asset, is directly impacted by the volatility regime. In a rising market, the volatility regime tends to shift towards a lower volatility environment, as the market becomes less sensitive to news and events. This shift can result in a decrease in the expected move, making it more challenging for traders to achieve their target prices.

A key consideration for traders is the relationship between the expected move and the volatility regime. If the expected move is decreasing while the market is rising, it may indicate that the market is becoming less volatile, and traders should adjust their strategies accordingly. On the other hand, if the expected move is increasing while the market is rising, it may indicate that the market is becoming more volatile, and traders should be prepared for potential reversals.

Session Behavior and Market Dynamics

The session behavior of the market, including the opening range and the initial trend, can significantly impact the structure of 0DTE options. In a rising market, the opening range tends to be higher, and the initial trend tends to be upwards, which can lead to a decrease in the expected move and a shift towards a lower volatility regime.

Traders should be aware of the market dynamics and how they impact the structure of 0DTE options. For example, if the market is rising and the opening range is higher than expected, it may indicate that the market is becoming more bullish, and traders should adjust their strategies accordingly. On the other hand, if the market is rising and the opening range is lower than expected, it may indicate that the market is becoming more bearish, and traders should be prepared for potential reversals.

Practical Applications and Takeaways

In conclusion, a rising market can have a significant impact on the structure of 0DTE options, including the expected move, volatility regime, and session behavior. Traders should be aware of these dynamics and adjust their strategies accordingly. Two key takeaways for traders are to monitor the expected move and volatility regime, as they can provide valuable insights into market dynamics, and to be prepared for potential reversals, as the market can quickly change direction.

As you continue to navigate the complex world of 0DTE options, consider exploring the Confluence Decision Desk to gain a deeper understanding of market structure and dynamics, and to improve your trading decisions.

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Educational content only. Options involve substantial risk.