What Are Overnight Returns?
Overnight returns refer to the change in an asset’s price between the market’s closing level and its opening level the following morning. Even though stock exchanges are closed during these hours, the global financial system never truly sleeps.
Equity markets continue to move after the closing bell because of activity in futures markets, which trade almost 24 hours a day. These futures contracts track major indexes like the S&P 500 and Nasdaq 100 and respond instantly to news around the world as well as movements in global financial markets in Asia and Europe. When the North American markets open the next day, these changes are reflected in stock prices.
Why Overnight Returns Matter
Overnight returns are an important source of long-term stock price appreciation that is often overlooked. In fact, studies including research from the Federal Reserve Bank of New York[1] show that over time, the majority of stock market gains occurred overnight, not during the trading day. These moves are often driven by factors such as:
- Company-specific news: Material information (read: “market moving”) such as earnings results, merger activity, and regulatory action is typically released after the close or before the open
- Economic data: Reports like inflation and jobs numbers are often published before U.S. markets open
- Global events: Political, policy, or economic news can move markets outside of trading hours
Importantly, these moves can be significant, and investors who are not invested or exposed overnight can miss out on a meaningful part of total returns.
Don’t Sleep on Overnight Returns
Overnight returns can be triggered by a single news announcement, creating sharp changes as trading begins. For example, on Sunday, May 11, 2025, the White House announced major progress on trade negotiations with China, including a 90-day truce. By the time U.S. markets opened the next morning, the S&P 500 had already jumped over +3%[2] vs. the previous night’s close. That entire move happened before investors could trade stocks during normal hours, and anyone not exposed/invested overnight missed it.
Looking at the bigger picture, overnight returns accounted for the majority of long-term market performance. Since 2000, the S&P 500 has delivered far stronger returns overnight than during the trading day. On average, annualized overnight returns were +7.67%, compared to just +1.41% during standard trading hours[3]. Put another way, a $100 investment in the S&P 500 held only during the day would have grown to about $127, while the same investment held only overnight would have grown to about $548 (Figure 1, 2).
Intraday vs. Overnight Returns[4]
As noted, overnight returns have historically accounted for the majority of positive market gains in the S&P 500. For a vanilla equity investor, if they stayed invested overnight, they maintain that exposure. For a covered call ETF investor, the upside capture overnight can be limited by the call option. By selling call options each morning that expire at the same-day market’s close, DayMAX™ ETFs only limit upside during regular trading hours, when the upside has historically been more limited, and they are fully exposed overnight, when there has historically been more money to be made (see charts below).
Figure 1: S&P 500 Intraday vs. Overnight Returns[5]
Source: Bloomberg, S&P Global, Hamilton ETFs
Past performance is not indicative of future results. Overnight vs. intraday returns may differ materially in future periods.
Figure 2: S&P 500 Intraday vs. Overnight Returns[6]
| Year | S&P 500 Intraday Return |
S&P 500 Overnight Return |
Overnight Outperformance |
| 2000 | (30.94%) | 30.72% | Yes |
| 2001 | 1.37% | (12.95%) | No |
| 2002 | (13.49%) | (9.36%) | Yes |
| 2003 | 19.08% | 7.64% | No |
| 2004 | 3.33% | 7.14% | Yes |
| 2005 | (9.20%) | 15.45% | Yes |
| 2006 | 5.21% | 10.11% | Yes |
| 2007 | (8.78%) | 15.26% | Yes |
| 2008 | (23.63%) | (17.26%) | Yes |
| 2009 | 16.28% | 8.68% | No |
| 2010 | 6.04% | 8.50% | Yes |
| 2011 | (2.92%) | 4.95% | Yes |
| 2012 | 9.19% | 6.23% | No |
| 2013 | 15.78% | 14.27% | No |
| 2014 | 2.53% | 10.66% | Yes |
| 2015 | (1.28%) | 2.56% | Yes |
| 2016 | 14.52% | (2.20%) | No |
| 2017 | 7.54% | 13.17% | Yes |
| 2018 | (16.77%) | 14.68% | Yes |
| 2019 | 14.11% | 14.99% | Yes |
| 2020 | 3.35% | 14.54% | Yes |
| 2021 | 9.50% | 17.58% | Yes |
| 2022 | (5.58%) | (13.34%) | No |
| 2023 | 19.18% | 5.88% | No |
| 2024 | 0.85% | 23.83% | Yes |
| Average | 1.41% | 7.67% | 68% |
Source: Bloomberg, S&P Global, Hamilton ETFs
Past performance is not indicative of future results. Overnight vs. intraday returns may differ materially in future periods.
DayMAX™ ETFs: Daily Options + Overnight Returns
DayMAX™ ETFs are built to generate frequent income while maintaining exposure to overnight returns. Unlike traditional covered call strategies that write options for weeks or months, DayMAX™ ETFs sell daily (specifically, zero-days-to expiration, or 0DTE) index call options each morning that expire at the market’s close. This structure means:
- Full overnight exposure: All call options expire by the market close, so the entire portfolio participates in price changes between the close and the next open, but as a result, experiences less volatility reduction.
- Partial daytime coverage: Typically, only about 25% of the portfolio is covered during the trading day. The rest of the portfolio remains fully exposed to market moves, both intraday and overnight.
- Modest 25% Leverage: Enhanced income and growth potential from additional exposure. While leverage can increase portfolio volatility, its impact is moderated by the conservative level used and the blue-chip nature of the underlying holdings.
With approximately 250 trading days per year to generate option income, versus just 12 months with traditional covered calls, DayMAX™ ETFs aim to provide higher and more frequent payouts with semi-monthly distributions.
DayMAX™ Lineup:
- CDAY – Hamilton Enhanced Canadian Equity DayMAX™ ETF: Invests in the HAMILTON CHAMPIONS™ Canadian Dividend Index ETF (CMVP) and writes daily S&P 500 index calls.
- SDAY – Hamilton Enhanced U.S. Equity DayMAX™ ETF: Invests in the Hamilton U.S. Equity YIELD MAXIMIZER™ ETF (SMVP) and writes daily S&P 500 index calls.
- QDAY – Hamilton Enhanced Technology DayMAX™ ETF: Invests in the Technology Select Sector SPDR Fund (XLK) and writes daily Nasdaq 100 index calls.
Led by Hamilton’s Chief Options Strategist, Nick Piquard, and his experienced options team, the DayMAX™ ETFs are designed to complement traditional covered call strategies, offering frequent income while staying fully exposed to overnight returns.
____
A word on trading liquidity for ETFs …
Hamilton ETFs are highly liquid ETFs that can be purchased and sold easily. ETFs are as liquid as their underlying holdings and the underlying holdings trade millions of shares each day.
How does that work? When ETF investors are buying (or selling) in the market, they may transact with another ETF investor or a market maker for the ETF. At all times, even if daily volume appears low, there is a market maker – typically a large bank-owned investment dealer – willing to fill the other side of the ETF order (at net asset value plus a spread). The market maker then subscribes to create or redeem units in the ETF from the ETF manager (e.g., Hamilton ETFs), who purchases or sells the underlying holdings for the ETF.
____
Certain statements contained in this article may constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking information may relate to a future outlook and anticipated distributions, events or results and may include statements regarding future financial performance. In some cases, forward-looking information can be identified by terms such as “may”, “will”, “should”, “expect”, “anticipate”, “believe”, “intend” or other similar expressions concerning matters that are not historical facts. Actual results may vary from such forward-looking information. Hamilton ETFs undertakes no obligation to update publicly or otherwise revise any forward-looking statement whether as a result of new information, future events or other such factors which affect this information, except as required by law.
The S&P 500 Index (“Index”) and associated data are a product of S&P Dow Jones Indices LLC, its affiliates and/or their licensors and has been licensed for use by Hamilton ETFs © 2025 S&P Dow Jones Indices LLC, its affiliates and/or their licensors. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices please visit www.spdji.com. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC (“SPFS”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). Neither S&P Dow Jones Indices LLC, SPFS, Dow Jones, their affiliates nor their licensors (“S&P DJI”) make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and S&P DJI shall have no liability for any errors, omissions, or interruptions of any index or the data included therein.
Commissions, management fees and expenses all may be associated with investments in exchange traded funds (ETFs) managed by Hamilton ETFs. Please read the prospectus before investing. ETFs are not guaranteed, their values change frequently, and past performance may not be repeated.
[1] Source: Boyarchenko, N., Larsen, L. C., & Whelan, P. (2020, revised 2022). The Overnight Drift (Federal Reserve Bank of New York Staff Report No. 917). https://www.newyorkfed.org/research/staff_reports/sr917.html
[2] Source: Bloomberg, S&P Global, Hamilton ETFs
[3] Returns are based on the SPDR S&P 500 ETF Trust (SPY), calculated using daily opening and closing prices. Intraday returns represent the percentage change from market open to market close. Overnight returns represent the percentage change from market close to the following day’s open.
[4] Intraday returns are calculated based on the price change of the SPDR S&P 500 ETF Trust (SPY) from the market open to the market close of each trading day. Overnight returns are calculated from the market close of one trading day to the market open of the next trading day. Results reflect the period from January 1, 2000, through August 29, 2025. Source: Bloomberg, S&P Global, Hamilton ETFs
[5] Source: S&P Global, Bloomberg, Hamilton ETFs. Data from Jan 1, 2000, to August 29, 2025.
The graph illustrates the growth of an initial investment of $100 in the SPDR S&P 500 ETF Trust (SPY), the SPDR S&P 500 ETF Trust (SPY) overnight, and the SPDR S&P 500 ETF Trust (SPY) intraday with annual compounded total returns. The graph is for illustrative purposes only and intended to demonstrate the historical impact of the indexes compound growth rate during intraday and overnight sessions. It is not a projection of future index performance, nor does it reflect potential returns on investments in the ETF. Investors cannot directly invest in the index. All performance data assumes reinvestment of distributions and excludes management fees, transaction costs, and other expenses which would have impacted an investor’s returns.
[6] Annual returns are the compounded sum of daily intraday and overnight returns from January 1 to December 31 of each year. S&P 500 Total Return” performance is represented by the SPDR® S&P 500® ETF Trust (SPY). Performance shown reflects the returns of SPY, which seeks to track the total return of the S&P 500® Index, inclusive of reinvested dividends.