Hi. Check out the full blog on Risk.net's article here. Matt Amberson was quoted multiple times in the recent Risk.net article “Taming of the skew sparks new debate over 0DTEs” in their July 19th edition. Matt has consistently argued that since their inception in May 2022, 0DTE options will help market makers greatly reduce risk to their books and stabilize the markets. This happened very shortly after options with daily expirations were introduced, as evidenced by changes to the overall put-call skew of the options market. Data from Orats shows the S&P 500 options skew has historically traded in a 5% to 9.5% range for contracts with a 10-delta difference. Since mid- 2022, this premium has fallen to a range of 2% to 5%. Amberson says the options market has now entered “a completely different paradigm” where “the support has become the resistance”. And he is convinced 0DTEs – which now account for 49% of S&P 500 options trading at Cboe – are a major factor in the shift to a lower skew regime. Historically, market makers have a systematic position of short out-of-the-money puts and long calls. The puts result from regulatory mandates on large financial institutions to have downside protection and natural hedgers of long stock portfolios. Long calls on market makers' books come from the most popular options strategy of overwriting or selling calls against long positions. Market makers responded to their systematic trading by raising the relative prices of puts and lowering the call prices, creating a skewed view of the pricing relationship. This heightened skew is evident in the S&P options compared to the component single stock skews. 0DTE options came out of the gate with large volumes and balanced trading. They did not have the typical inclination to buy puts and sell calls seen in longer-dated SP options. This balanced trade allowed market makers to buy puts and sell calls in the newly enhanced short-term trading, and this has led to a flattening of the put-call skew, with put prices falling and calls rising in proportion across the many expirations of options. This behavior is clear in the following chart. The support has become the resistance in Slope. Another effect of the market makers has been to increase position size, which has led to higher volume and a more muted volatility in the overall market. Market makers are natural hedgers. At the same time, other options participants will put on a position and not usually change if the market moves. Market makers are different. They will actively hedge their position as market levels change their relative exposure to profit or losses. For example, when market makers were short puts out of balance, and the markets started to pall, the relative importance of the out-of-the-money puts would rise, causing them to incur losses and have to sell the underlying to offset the potential losses of further downward market moves to their options positions. Conversely, if the market rose, they would sell the underlying as they say the value of their calls starts rising and have to lock in any gains they might have. The flip in the behavior of market makers since the introduction of 0DTEs has caused the put call skew to flatten moves to the downside not to be as violent and upside moves are not met with as much selling and be more pronounced.