re: Options Trading Thread

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Whew, I bet these little runs are nerve wracking for the 0 dtes.

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Some days it's like holding a hand grenade, with the pin about to fall out... and Wile E. Coyote is jabbing you in the back with a stick. I was at 4155p/4340c on my ICs, so I wasn't really tested today - and I added to both sides of my position during the session as the market dove & rose. But I was rooting for our pal LSUTIGERS74. If he stuck it out, his 0DTE 4315 short calls turned to dust in the last few minutes.

I've been there before, and being that far in the money (4324.10) on a 4315 short call strike, especially going into the close, is NOT fun at all.

I did stick it out for some reason out of my normal roll out early rule and got extremely lucky. Only stayed because I felt it wouldnt hold up late day with the large late afternoon run up. Was feeling pretty iffy holding 10 contracts at 5 wide that late and at max loss.

BourbonDad I agree and fairly sure I am one of those. Still trying to learn 0DTEs and need to work on when to get in, roll, out and what credit is acceptable versus the risk captial and ROI. Very impressive p/l. I am only running a fraction of that and risking about 10-15k capital per day (assuming max loss on each contract)

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Still trying to learn 0DTEs and need to work on when to get in, roll, out and what credit is acceptable versus the risk captial and ROI.

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Give yourself lots of credit for how quickly you’ve picked up on successfully trading these short term derivatives. It’s not easy and can be stressful… but it also has great profit potential. I have total respect for Sosnoff and Battista. But their overall market knowledge is on a different level than 99% of the retail traders out there - and all that they do is not necessarily suitable for me and my trading style. So I’ve tried to learn from them, while not completely imitating them. I’ve had to find strategies that worked for me and my style - and through 9 months this year, I’ve managed to chalk up an 88% gain on capital at risk/buying power reduction, just from SPX short option strategies (mostly 0-1DTE). Realize that we’ve been limited on how much capital we’re “allowed” to deploy, because IV/VIX levels have been abnormally low for most of this year - so I’m quite content with that level of profit. I consider the equity earnings plays icing on the cake. But it’s taken me quite a few years (and finally deciding to do this full time) before I had consistent profitability fairly well in hand (and learning how to take and learn from the inevitable losses).

As you further develop your trading style, and what works for the limits within your time available to monitor trades, I firmly believe that you’ll also find consistent profitability. You strike me as someone who is quite serious about this endeavor, and that’s what most/many lack. On the various “hot stock” and “next big thing” threads that litter this board, you can tell who is playing or gambling, and who is really serious. I enjoy this thread because it tends to attract the serious players.

I’m looking forward to meeting up with all of you fellows in this thread at an investor conference at some point. Since no one in my real life world has a clue about what I do or how I do it, I find meet-ups to be refreshing and energizing.

As my coffee mug says: Keep Calm and Trade On… and look for some hot IV tomorrow (because of the news coming out of the Middle East ).

Learning to play this game. Money is in the charts. SPY

@ BourbonDad, let’s talk

Yes, especially since I retired a couple of months ago and have had more time to monitor, construct and trade, I’ve been fine tuning my 0-1DTE strategies. They’ve done extremely well for me since then. IV/VIX levels determine how much capital I can reasonably deploy (per the Sosnoff developed chart I posted awhile back). And I tend to launch larger size (sometimes multiple lots) at lower deltas, with the aim of letting them turn to dust by the close. 1.5-2% daily gains tend to add up nicely over time.

I had a nasty loss on the same day that LSUTIGERS took a hit and I was red for that week. But with the pop in the VIX that that downdraft caused, I deployed more capital the following week and recovered most of that loss. By the next week, I left it in the the rearview mirror. Even though it’s not fun to get hit with a loss, IMO, you can learn at least as much from losing trades as winning trades. I examined that loser to see if I’d violated any of my trading rules or missed something on trade construction and/or entry. And while I didn’t really violate my rules, I continue to see how important it is to NOT chase a trade just to get a fill. That’s especially true with these short duration options. Gamma/tail risk is much more powerful than the immediate deltas with these things. So it’s best to just let the market come to you. If the trade executes, great. If not… there’ll always be another trade on another day.

How many contracts is your average short position on the 0-1DTE vs others? I’m not a big 0DTE seller anymore, mostly sell 10 pack weekly spreads $5-$10 wide

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How many contracts is your average short position on the 0-1DTE

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I have been basing it on max capital risk, so depending on whether I get 5 or 10 wide strikes I will play 5 to 10 contracts each side of IC

same here, I tend to sell call spreads once the long side is at the money expecting it to reverse and expire beneath my short side. If I'm wrong and it continues, gamma works in my favor. If I want to flip bias, I just cover the short side and hold the long. If IV spikes after, the spread value drops all else equal. Plus you can normally get 1:1 risk/premium.

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sell call spreads once the long side is at the money expecting

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If I understand you correctly you are taking SCV very near to ATM in hopes that peak has been reached and max credit is obtained? On 0DTE how do you manage if you are wrong and it continues upward? I cant see how gamma helps when it can quickly be deep ITM and at max loss