Zero-Day Option Traders Are Betting Against Big S&P 500 Swings

• 0DTE options traders are increasingly betting the S&P 500 stays calm despite major catalysts. • UBS strategist Kieran Diamond found traders buying calls/selling puts on dips, reverse on rallies. • This 'counter-trend delta bias' acts like buying low, selling high, dampening index swings. Zero-day options traders are increasingly positioning for the S&P 500 to stay calm, even as other investors brace for AI earnings, geopolitics, and interest rate decisions to push stocks sharply higher or lower. According to an analysis of 0DTE options flow by UBS Group derivatives strategist Kieran Diamond, tactical traders have shifted toward buying calls and selling puts when the market falls, then doing the opposite during rallies. This pattern, dubbed a "counter-trend delta bias," effectively mimics buying low and selling high across the market, which further dampens swings in the index.