re: Options Trading Thread

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I wanted to report performance on the 0 DTE IF, which is a strategy I've pivoted to for 2023 in the lower IV environment.

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There’s a report on CNBC right now about 0DTE options trading. It’s getting the attention of the big trading houses. Nomura claims that nearly half of the SPX options traded are 0DTE and less than a week. According to the report, it had been mainly large institutional money managers using these short dated contracts to hedge risk. Now more retail and smaller money managers are using them. Also, more quant traders are apparently using them in arbitrage strategies. The report also points out that options volume is at an all time high.

Great report. Hopefully this one will show up on the website.

Seems to be getting more coverage in the financial media over the past month or so. The bigger trading houses and the market makers seem to be having trouble dealing with the uptick in 0DTE options trading because they don’t have time to offset their own positions.

Some think that it’s a sign of increased retail speculation - which they say is worrying and is one cause of increased intraday swings (like today?). Others claim that since the trades settle the same day as expiration (or within a day), it’s just another strategy that the markets will eventually absorb.

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There’s a report on CNBC right now about 0DTE options trading. It’s getting the attention of the big trading houses. Nomura claims that nearly half of the SPX options traded are 0DTE and less than a week. According to the report, it had been mainly large institutional money managers using these short dated contracts to hedge risk. Now more retail and smaller money managers are using them. Also, more quant traders are apparently using them in arbitrage strategies. The report also points out that options volume is at an all time high. Great report. Hopefully this one will show up on the website.

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I read this warning last night. Crazy

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I know you’ve already sold for a nice profit. But I wish that I’d followed you into a long call VIX trade. Mega!

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I wish I had held.

^^^Nice.

With that nasty downdraft yesterday, after I’d sold a large number of 2/21 SPX syn. strangles ), today was nice. Theta decay is your friend (as a premium seller), as long as IV doesn’t severely expand.

And looks like ol’ Elon (with that recall) let me keep the TSLA shares, so I could sell some 2/24 weekly 215 calls for 4.33 to replace the 212.50s that expired this week. Might actually make good money on what started as a busted options trade. Sometimes it’s better to be lucky than good.

Glad you got that straightened out. There was some weird things going on with Ford options too, because of a special distribution. The options specialists at TDA are usually good about getting to the bottom of issues.

Hard to say. Once you’re long those 100 shares, would you want to be long another 100 shares in case a short put got assigned? I’m only in TSLA shares as a short term trade, and now using covered calls (with fat premiums right now) to exit at a specific strike. But if your goal is to build a larger position as a longer term investment in a given stock, I think short (cash covered) puts are a good way to do that. And then selling low delta/far OTM calls as a way to have a somewhat protected position, but still generate a little extra yield.

On stocks I’m holding as investments, I do that quite often. You have to be careful going into an earnings period, as the equity could react VERY positively and your shares get called away when you’d rather hold onto them. But overall, far OTM call options, sold over time, can easily (and relatively safely) add another 3-5% in annualized returns on a stock that has moderate IV. I especially use that strategy on stocks that don’t pay dividends… I just create my own dividends.

Long or short?