Asset Classes

Free investment financial education


Multilingual content from IBKR

Close Navigation
Learn more about IBKR accounts
Monthly Expirations – 2X the 0DTE.  Plus, NDX Rebalancing

Monthly Expirations – 2X the 0DTE.  Plus, NDX Rebalancing

Posted July 21, 2023 at 12:45 pm
Steve Sosnick
Interactive Brokers

Thanks to some other commitments, today’s note will be a short one on a typically weighty pair of topics.

First, today is a monthly options expiration. With the advent of weekly and now daily expiries, monthly expirations have been downgraded from “double-witching” causes for concern to seemingly just another day. But that is an oversimplification.  And today, thanks to the rebalancing of the NASDAQ 100 (NDX), we have the potential for some extra fireworks on the close.  

The heavy weighting of mega-cap tech stocks in NDX (and thereby QQQ) has gotten so extreme that the index can no longer be considered well-diversified.  That is causing Nasdaq to reduce the weights of Nvidia (NVDA), Microsoft (MSFT), Amazon (AMZN), Tesla (TSLA), Alphabet (GOOG/GOOGL), Meta Platforms (META) and Apple (AAPL) within the index.  Since the index change is effective on Monday, funds that track the index need to adjust their positions as of today’s close. 

In theory, we should expect to see relatively heavy selling in those names on the close and buying in the 92 other names that will be going up in weight.  We also might expect to see some pressure on SPY today because those stocks are all heavily weighted in the S&P 500 as well.  That said, on that basis, QQQ should underperform today.  But nothing is a given here.

As a result, we see a preponderance put buying in QQQ and the affected stocks at this point.  We also see some marginal net call buying in some of the smaller names in NDX.  But with markets relatively unchanged at midday, it is hard to separate the causes.

Earlier today we saw some aggressive pre-market buying of ES futures.  The aggressive run-up seemed to have the hallmarks of a 0DTE move.  And it very well might have been that type of rally.

That is thanks to an overlooked feature of monthly expirations.  On most days, we have but one set of 0DTE options, but on monthly expirations we have two.  A key feature of monthly expirations is that we have index options that expire on the open.  As with all options on expiration day, those become 0DTE.  Remember, every option becomes 0DTE on expiration, thus every options class has 0DTE options on major expiration days. 

Thus, we have the potential for a fascinating afternoon on what otherwise might have shaped up to be a sleepy mid-summer Friday.

Join The Conversation

If you have a general question, it may already be covered in our FAQs. If you have an account-specific question or concern, please reach out to Client Services.

Leave a Reply

Disclosure: Interactive Brokers

The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Interactive Brokers, its affiliates, or its employees.

Disclosure: ETFs

Any discussion or mention of an ETF is not to be construed as recommendation, promotion or solicitation. All investors should review and consider associated investment risks, charges and expenses of the investment company or fund prior to investing. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Disclosure: Options Trading

Options involve risk and are not suitable for all investors. Multiple leg strategies, including spreads, will incur multiple commission charges. For more information read the "Characteristics and Risks of Standardized Options" also known as the options disclosure document (ODD) or visit

IBKR Campus Newsletters

This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.