The Truth About 0DTE: Where the Edge Really Comes From

0DTE options trading offers a high-frequency opportunity to extract risk premium through systematic, uncorrelated strategies. Mark Anderson, founder of MBH Capital, argues that success in this space relies on managing execution risk, understanding volatility factors, and maintaining a diversified portfolio of uncorrelated signals rather than relying on a single "edge." The perceived risk of 0DTE is often overstated, provided traders effectively manage position sizing and use stop-losses to mitigate tail risk. By treating trading as a series of high-frequency, binary occurrences, practitioners can achieve a high Sharpe ratio. Market makers, not retail traders, drive the liquidity landscape, and institutional interest in these strategies is growing as firms seek to navigate the ebb and flow of market volatility. Ultimately, the ability to combine multiple, zero-correlated strategies allows for consistent compounding in an otherwise volatile market environment.