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0DTE option strategies
Posted on 11/15/22 at 11:01 am
Posted on 11/15/22 at 11:01 am
Do any of y'all trade these?
I usually buy 1 ODTE (days to expiration) SPX ATM (at the money) call or put option (usually buying puts if the market ripped at the open or calls if it dipped at the open) about 30 minutes after trading starts and am usually able to flip them for a 50-100% gain within a half hour after entry. I only trade 1 contract at a time (usually it's about $1,000 total, 100 shares * ~$10/share option premium) and have done this enough round trips now that I'm playing with house money and can't lose more than I started with. I have a stop loss at usually about a 40% drop from my entry price.
Does anyone else trade ODTE options here, and if so what strategies do you use and profit targets do you try to obtain? Do you watch the market after you enter your position, or do you walk away and just have a limit order set for your desired profit? I find walking away and not watching each tick and having preset limit orders in place is the most effective way to keep emotions out of the trading.
I usually buy 1 ODTE (days to expiration) SPX ATM (at the money) call or put option (usually buying puts if the market ripped at the open or calls if it dipped at the open) about 30 minutes after trading starts and am usually able to flip them for a 50-100% gain within a half hour after entry. I only trade 1 contract at a time (usually it's about $1,000 total, 100 shares * ~$10/share option premium) and have done this enough round trips now that I'm playing with house money and can't lose more than I started with. I have a stop loss at usually about a 40% drop from my entry price.
Does anyone else trade ODTE options here, and if so what strategies do you use and profit targets do you try to obtain? Do you watch the market after you enter your position, or do you walk away and just have a limit order set for your desired profit? I find walking away and not watching each tick and having preset limit orders in place is the most effective way to keep emotions out of the trading.
This post was edited on 11/15/22 at 11:28 am
5
Posted on 11/15/22 at 4:46 pm to DeSantis_2024
I haven't but had considered doing some of this. I started reading Jeff Augen's book “Trading Options at Expiration” to better understand and it's a wealth of knowledge but just haven't found time to actually trade it yet.
Posted on 11/15/22 at 5:51 pm to DeSantis_2024
Nope. This is the first I have of 0DTE trading.
Try it for a while. If it works come back and share.
Try it for a while. If it works come back and share.
Posted on 11/15/22 at 7:38 pm to frogtown
quote:
Nope. This is the first I have of 0DTE trading.
Try it for a while. If it works come back and share.
Be very speculative of people on the internet, especially with such inconsistent posts.
quote:
for a 50-100% gain within a half
quote:
and have done this enough round trips now that I'm playing with house money
According to your post, then you've done it 1.5 times, for approximately 45 minutes.
Posted on 11/15/22 at 8:43 pm to j1897
0 DTE strategies = black or red
Don’t get me wrong, I play too
Don’t get me wrong, I play too
Posted on 11/15/22 at 8:47 pm to j1897
quote:
Be very speculative of people on the internet, especially with such inconsistent posts.
Thanks but no worries about me. I have been doing this options stuff for a long time. I am skeptical of anything short term.
This post was edited on 11/17/22 at 9:40 am
Posted on 11/15/22 at 9:03 pm to DeSantis_2024
5min Spy chart. Use ORB UCB MACD 13/48/200EMA crosses and watch for hammer and shooting star candles. Chart daily/weekly/monthly levels.
Newest thing is I've been playing the weighted vwap crosses too. Use close stops. Have done extremely well doing this, but you cant be greedy. Always move stops green when given the chance. I did miss the 1000% move today on puts but made 70% and moved my stop up a tiny bit too much.
Also use a lot of sma on homework to watch for close levels approaching.
I also hardly ever trade at open unless it gaps up like today and I'll usually take a small position opposite of gap with a close stop. There's my few years learning how to be profitable for free lol.
Newest thing is I've been playing the weighted vwap crosses too. Use close stops. Have done extremely well doing this, but you cant be greedy. Always move stops green when given the chance. I did miss the 1000% move today on puts but made 70% and moved my stop up a tiny bit too much.
Also use a lot of sma on homework to watch for close levels approaching.
I also hardly ever trade at open unless it gaps up like today and I'll usually take a small position opposite of gap with a close stop. There's my few years learning how to be profitable for free lol.
Posted on 11/16/22 at 10:53 am to DeSantis_2024
I'm in 0 DTE option trades all of the time.
Something you might not have thought of is using 0 DTE calls on your long common equity positions to juice your returns to compensate for the market risk that goes along with owning equities.
Something you might not have thought of is using 0 DTE calls on your long common equity positions to juice your returns to compensate for the market risk that goes along with owning equities.
This post was edited on 11/16/22 at 10:54 am
Posted on 11/16/22 at 11:00 am to wutangfinancial
It can definitely be a den of gambling, but so long as you manage your risk to be bite size it seems like a good play in this highly volatile market.
You mean you would buy 0DTE calls to go along with your long commons?
You mean you would buy 0DTE calls to go along with your long commons?
Posted on 11/16/22 at 9:37 pm to DeSantis_2024
0 DTE SPX strategies have been my go-to this year, but short premium, not long.
Every day, I sell a 80-120 (varies) wide 5 delta Iron Condor. Acts as a synthetic strangle.
Sell a 5 delta call and 5 delta put.
Buy long wings for $.05 on both sides.
Target profit $1.50. Stop loss on short legs at 500% credit received.
Here was today’s trade:
Here’s November results thus far:
Here is backtested data for the strategy YTD in 2022:
ETA:
$SPX down 0.83%, but still made money.
Every day, I sell a 80-120 (varies) wide 5 delta Iron Condor. Acts as a synthetic strangle.
Sell a 5 delta call and 5 delta put.
Buy long wings for $.05 on both sides.
Target profit $1.50. Stop loss on short legs at 500% credit received.
Here was today’s trade:
Here’s November results thus far:
Here is backtested data for the strategy YTD in 2022:
ETA:
$SPX down 0.83%, but still made money.
This post was edited on 11/16/22 at 9:57 pm
Posted on 11/16/22 at 9:46 pm to Brobocop
Very interesting. What’s your average $ invested each day on those trades? It says 20% allocation so is that $200K on the $1M portfolio?
Posted on 11/16/22 at 9:50 pm to DeSantis_2024
I don’t trade with a $1M acct lol. That’s a back testing software, option omega, that shows the effectiveness of the strategy.
You’d have to trade this in an acct >$25k due to PDT.
The strategy uses anywhere from $7,000-$10,000 in buying power. Depends on the width of the spread, and that varies each day. But you’re only risking ~$400-$500, with the use of stop losses.
ETA: Avg buying power reduction is prob $8k in 2022.
So 150% ROC so far this year.
10% ROC halfway through November.
You’d have to trade this in an acct >$25k due to PDT.
The strategy uses anywhere from $7,000-$10,000 in buying power. Depends on the width of the spread, and that varies each day. But you’re only risking ~$400-$500, with the use of stop losses.
ETA: Avg buying power reduction is prob $8k in 2022.
So 150% ROC so far this year.
10% ROC halfway through November.
This post was edited on 11/16/22 at 10:05 pm
Posted on 11/17/22 at 7:41 am to Brobocop
What software do you use to determine the strikes that equate to 5 delta for the short call and put legs?
Do you have a limit order set to unwind the trade at your target profit, or do you just hold it through to expiration at the end of the day?
Is the 5x premium stop loss set to unwind both side of the trade, or just the put or call side that got hit?
I've read that many other traders of short vol 0DTE strategies like this have nice daily gains and then one massive day comes through where things move so fast that their stop loss can't execute in time and they wipe out months of gains in one day. Has that happened to you yet with this strategy?
Thanks again!
Do you have a limit order set to unwind the trade at your target profit, or do you just hold it through to expiration at the end of the day?
Is the 5x premium stop loss set to unwind both side of the trade, or just the put or call side that got hit?
I've read that many other traders of short vol 0DTE strategies like this have nice daily gains and then one massive day comes through where things move so fast that their stop loss can't execute in time and they wipe out months of gains in one day. Has that happened to you yet with this strategy?
Thanks again!
Posted on 11/17/22 at 9:01 am to DeSantis_2024
All good questions!
I exclusively trade options on TastyWorks. Their platform tells you the delta for each strike.
No, I just check it periodically. I can't set Stop Limit orders AND limit orders simultaneously. However, this strategy has very similar results even if you were to let the trade expire.
I set a Stop Trigger at 5x premium, and I set the Limit order price $0.40 HIGHER than the trigger.
The stop limit is set for both short legs. If one short leg gets stopped, I manually shut down the untested leg. Typically the untested leg will be at 90-95% MP. This eliminates the risk of both legs getting stopped out (which can happen with big market swings).
By setting the Stop Limit Order at $.40 higher than the Stop Limit Trigger, you won't have this problem. I haven't experienced it.
quote:
What software do you use to determine the strikes that equate to 5 delta for the short call and put legs?
I exclusively trade options on TastyWorks. Their platform tells you the delta for each strike.
quote:
Do you have a limit order set to unwind the trade at your target profit, or do you just hold it through to expiration at the end of the day?
No, I just check it periodically. I can't set Stop Limit orders AND limit orders simultaneously. However, this strategy has very similar results even if you were to let the trade expire.
quote:
Is the 5x premium stop loss set to unwind both side of the trade, or just the put or call side that got hit?
I set a Stop Trigger at 5x premium, and I set the Limit order price $0.40 HIGHER than the trigger.
The stop limit is set for both short legs. If one short leg gets stopped, I manually shut down the untested leg. Typically the untested leg will be at 90-95% MP. This eliminates the risk of both legs getting stopped out (which can happen with big market swings).
quote:
I've read that many other traders of short vol 0DTE strategies like this have nice daily gains and then one massive day comes through where things move so fast that their stop loss can't execute in time and they wipe out months of gains in one day. Has that happened to you yet with this strategy?
By setting the Stop Limit Order at $.40 higher than the Stop Limit Trigger, you won't have this problem. I haven't experienced it.
This post was edited on 11/17/22 at 9:04 am
Posted on 11/17/22 at 9:27 am to Brobocop
Thanks again for the answers. I use Fidelity for everything so trying to figure out if it's worth the brain damage to open up a TastyWorks account or if Fidelity has enough data in there for me to use their platform. Fidelity also has cheaper option trades than Tastyworks ($0.65 per contract versus $1 per contract). I wonder if I could look up the delta of options somewhere else on the internet for free?
Posted on 11/17/22 at 9:34 am to DeSantis_2024
quote:
Thanks again for the answers. I use Fidelity for everything so trying to figure out if it's worth the brain damage to open up a TastyWorks account or if Fidelity has enough data in there for me to use their platform. Fidelity also has cheaper option trades than Tastyworks ($0.65 per contract versus $1 per contract). I wonder if I could look up the delta of options somewhere else on the internet for free?
For Options, Tastyworks is FAR SUPERIOR. That's their bread and butter.
I also have accounts with fidelity, and options trading is not user friendly at all.
Posted on 11/17/22 at 9:36 am to Brobocop
Yeah I'm not seeing an easy way to set your stop losses with an iron condor on Fidelity. I assume that is easy to do on Tastyworks?
I might just have to transfer $25-30K to avoid day trader restrictions for TastyWorks and open up an account there.
I might just have to transfer $25-30K to avoid day trader restrictions for TastyWorks and open up an account there.
Posted on 11/17/22 at 9:37 am to DeSantis_2024
quote:
Yeah I'm not seeing an easy way to set your stop losses with an iron condor on Fidelity. I assume that is easy to do on Tastyworks?
I might just have to transfer $25-30K to avoid day trader restrictions for TastyWorks and open up an account there.
Tasty just allowed for Stops on spreads. You have to set stops on each individual short leg for this strategy, FYI
Posted on 11/17/22 at 9:47 am to Brobocop
Can you have your excess cash sitting in a money market account earning interest on Tastyworks? I'm getting 3.6% yield on SPRXX at Fidelity right now and it's treated same as cash as far as trading purposes.
Posted on 11/17/22 at 12:55 pm to DeSantis_2024
They do not offer mutual funds, no.
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