How Are You Managing 0 DTE Trades?
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- เผยแพร่เมื่อ 28 ก.ย. 2024
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Unless the loss is managed it is too high for this strategy to have long term success. I'd love to see how Tom manages his losers because this strategy is a recipe for disaster.
20 dollars away… I used 50 dollar wings to create a synthetic strangle and the straddle you can do it with 20 dollar wings
A 20 wide spx strangle is like 100k buying power. For 60 dollars before fees and slippage? Is that practical?
I'd be curious to know what Tom & Tony's minimum acceptable credit for a $20 OTM strangle would be?
The issue I have is that selecting strangle with 20$ OTM has almost no premium. How to make money with that?
Since im under $25k, /MES seems to be a good way to straddle 3x a day providing that it wont be affected by PDT restrictions
Unless you have a very favorable commission structure this will be very costly (/ES as well). Alternatively one could theoretically buy a call butterfly and sell the corresponding put butterfly (or vice versa) to create several box spreads and forego any PDT restrictions. (not financial advice)
@@petegranneman1623 i just calculated it and yes the commission is quite intense. Straddles are probably the only way which costs $4, but it will be 25% of the profits when using /MES
I think /ES IS THE WAY
hello?
This was a great piece; I shoot anywhere from 10% to 20% on OTE any more it gets risker maybe 25% if the underlying is moving faster.
Excellent. Can we get one of you guys to do one of those 0DTE $20 out of the money strangles one of these days in the near futureas a youtube video? Show a not so savvy guy like me how to make it happen on your tastytrade platform. How much buying power it would take to do one of these...the whole nine yards. Thanks guys. Edit: Do not care if it's a losing trade either! Also was thinking earlier and would very much like to see how these 20 delta strangles do on the SPY for the 0DTEs for smaller accounts. For like the past year, see how they perform at the open 8:30 central, 9:00 and 9:30. Then 2:00 and 2:30 p.m. Just to see.
With this 94% strategy, one CVaR loser needs 48 average PL trades to get back to even.
yes but cvars are like 5% of the losers, so if you are going to lose 4% of the time, then 5% of that losers will put you on that position...
I think you have to implement a stop loss. I'd like to see them backtest this exact video's research but with 50, 100 and 150% stop losses for example.
@@frozenyetimug how can you set a Stop loss for a strategy like straddle, Strangle, fly etc. There is no trading platform that has that feature. The stop loss is available at only individual legs level.
@@frozenyetimug But I believe, by not letting it ride out, that will reduce the number of winners.
Legit the only channel that options traders should watch. Thanks for your work gentlemen.
At the end of the video, Tom said part of effective management was giving up 10-15 dollars a day in long strikes. Did this mean hedging the strangle? If so, didn't that turn the strangle into an Iron Condor?
Yes
That's right Tony, tell us what Tom is thinking cause my brain works too slow to keep up with Tom.
I put my Wings $20 wide based on another video they did and hit the max loss and did not realize how big the loss becomes with $20 wings as I normally traded with $5 wings.
Now I will need about 50 wins to get back the one loss.
@Dillingham mentioned with this strategy you would need 48 trades to get back to even based on the max CVaR loss.
I don't totally understand their CVaR numbers but I understand how one could get in a situation where it takes 48 to 50 wins to get back to even.
When you get hit with a max loss that requires 40+ trades to get back it takes a lot of the fun out of the game.
Also, time of day is critical with this. They have another video where trades were placed mid-day and stated they did best with no management, so a very different outcome depending on the time of day the trade is placed.
I am on my 4th month of options trading, and have been learning from tasty this entire time. I’ve been crushing these 0 DTE iron condors, currently 41 trades deep with a 92% win rate, all thanks to Tom and Tony 🙏🏻
It’s time to start sizing these babies up!
Can u teach ne
What about losers? Just close at noon for whatever the trade ends up to be?
Nobody gonna become a millionaire by doing this
Where do you put your wings. I know you said strangles and straddles but the buying power requirement is just too much on 0DTE to not have wings
Yeah, I need help with this, too.
One way, you could buy the wings near delta 10 or 5 on the next month. And close it with the 0dte legs when you reach your target. The long legs will lose almost nothing of extrinsic value and will work as a cushion for sudden moves intraday. There is one video from tastytrade with this strategy. I don't remember the name.
@@guilhermebandeira1120 good idea but what does that do to your bpr
@Nickc86 firstly we trade SPY instead SPX. Secondly, buying the legs on the back month will reduce buying power, as you are limiting your risk. But you need to make sure to close the legs sold at the same day, even if the stock price goes beyond the long leg strikes. look at the market measure video named "did we just discovered the best 0dte strategy?" I hope you understand! Cheers!
@Nickc86 firstly, we trade SPY instead SPX. Secondly, for sure you will reduce the buying power by buying the long legs on the back month, as you are limiting your risk. Look at market measure video named "did we just discover the best 0dte strategy?"
The issue with 0DTE is that the max loss is very high. I took a max loss and will need probability 20 successful trades to make it back. What is the management strategy when you start seeing a loss? When do you close a loss? 2X of credit collected?
Tasty did an episode on exactly this topic if you search their 0 DTE titles.
Bottom line answer to your question, the P/L is positive over time if you take profit at 25% or sooner, letting losers ride til expiration. Taking profit at 50% with a stop loss of 50% the credit received was also a viable strategy.
I am using a variation of this approach for 0 DTE iron condors, where I take profit between 15-25% with a stop loss at 200% the initial credit. Then I re-center and open a new position. So far my win rate is 92%, almost exactly what tasty data predicts.
Time of day matters. I will start at market open, win 2-3 of these trades in a row, and be out before midday.
I have learned my lesson about trading 0 DTE in the afternoon, where the probability of an unmanageable max loss is considerably higher. Although my win rate is like 90% doing this too (also backed by tasty data).
@@rsbmg Almost entirely SPX and NDX, for the 60/40 tax benefit and cash settlement.
Roll it before it hits a nickel
@@rsbmg almost entirely SPX and NDX, for the 60/40 tax benefit, liquidity, and cash settlement.
@@MyChallenge-StartsToday Agreed. Never let a credit go negative.
Is this for any ticker? What ticker is the backtesting based on?
SPX
Isn’t the buying power astronomical for SPX? For a strangle.
What would be nice to see with this research before the takeaways is a summary of the best of each strategy and winning parms 🤓 … as that's unlikely to happen 😅 … I've finally decided to create my own spreadsheet and track MM takeaways 🤑🤑🤑
GD brilliant. Now can we talk about the TIME equivalent of 21-dte for max effect in volatility reduction?
how big are the losses?
Are you looking for advancing stocks sideways down trend? What is the definition of the primo stock set up for strangles (0DTE) and 45DTE
They are looking for stocks/ETF's with high implied volatility.
Can these be put on at mid day and managed before market close? Any analysis based on the time they are put on? Also which ticker SPX?
I was wondering the same thing, I think it might be the SPX.
Edit: 2nd slide talks about it being SPX
They did a time of day analysis in an earlier video. Basically, the first 90 minutes of the day.