An option’s price is driven by five main factors: the underlying price, the strike, time to expiration, implied volatility, and interest rates. Here’s how each moves the premium.
The five factors
1. Underlying price — moves the option via delta (the biggest driver intraday). 2. Strike — sets moneyness and intrinsic value. 3. Time to expiration — more time = more time value (theta erodes it). 4. Implied volatility — higher IV = pricier options (vega). 5. Interest rates — a minor factor (rho), small for short-dated.
What matters most on 0DTE
For 0DTE, the dominant drivers are the underlying price (delta/gamma) and time (fast theta) — IV matters little (low vega) and rates are irrelevant. So a 0DTE option’s price is mostly about where SPY is relative to the strike and how much time is left. Direction and the clock.
Five forces set an option’s price, but on 0DTE, only two matter much: where the underlying is, and how little time is left.
The takeaway
Option prices are driven by underlying price, strike, time, IV, and rates. Knowing the five demystifies pricing, and knowing which dominate on 0DTE (price and time) tells you what actually moves your scalp. It ties together the Greeks.
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NoVo is a software tool for market analysis, not financial advice. This article is general education, not investment advice. Options trading involves substantial risk of loss, up to and including your entire capital. NoVo makes no guarantee of profit, win rate, or performance, and past results do not predict future outcomes. You are responsible for your own broker account, configuration, and trading decisions.
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