0DTE Options Trading Explained With Examples
ฝัง
- เผยแพร่เมื่อ 5 ส.ค. 2024
- 0DTE options have exploded in popularity. In this video, we'll explore 0DTE options trading with specific examples to learn about the opportunities and risks of this fast-paced trading style.
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==== Chapters ====
0:00 Intro
0:27 What Are 0DTE Options?
0:53 Why Are 0DTE Options So Popular?
4:00 0DTE Trade Examples
6:59 Fighting Time Decay
8:29 Trade Management Tips
13:19 Risks Involved
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===== Summary =====
In this video, we'll walk through the world of 0DTE options trading, specifically:
What is 0DTE options trading?
Why is this type of trading so popular?
What are the benefits and risks of trading 0DTE options?
We'll then walk through numerous trade examples where I plot the SPY price vs. 0DTE calls and puts so you can clearly see how these short-term options behave.
=======
Disclaimer: Nothing contained in our content constitutes a solicitation, recommendation, promotion, or endorsement of any particular security, other investment product, transaction, or investment. Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involve substantial risk of loss and are not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. Past performance is not necessarily indicative of future results. I am not a financial advisor. The ideas presented in this video are for entertainment purposes only. You (and only you) are responsible for the financial decisions that you make.
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#OptionsTrading #0DTE
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NOTE: I forgot to mention the implications of day trading with 0 DTE options. Since positions are opened and closed the same day, you will rack up the day trade counter in a margin account with less than $25,000. If you do more than 3 day trades in a rolling 5 trading day period, your account will be flagged as a pattern day trader (PDT) and set to closing only. So 0DTE trading in a margin account with less than $25K has limitations.
Enjoyed this video? Let me know what you would like to see next!
Chris
Trading 0DTE on SPX is like a rodeo ride. I've had both great profits and devastating losses trading these.. It's a very tough mental game indeed.
Good explanation video!
Thanks for the note! Makes total sense. They move so fast so it's 'easy' to experience both sides of the coin. I appreciate your comment.
the types of moves that create divergences can really give people headaches and cause them to make mistakes.
I have been enjoying the ride quite a lot! Small profits, no huge losses, so I’ll stay on the horse.
I've been running particular credit spread strategies with $SPX ODTEs for about 14 trading days and I have an 80% win rate. I had one very stupid mistake making the trade, otherwise it would be even 85% or so. I'm going to continue the strategy for a month and see what happens, especially now that volatility is so much higher.
GREAT JOB explaining ODTE Options, my brother. I really appreciate it.
Glad to see you again Chris. I learned option trading from your serials of couses as beginner years ago. Your videos are still the best in TH-cam. No one else's is even close.
I appreciate that a lot! Thank you for your support and kind words. A lot more to come!
Same (hope the comment helps!)
Great explanation of 0DTE options Chris! I have made money but have lost more than I made using 0DTE options. It is much more stressful than multiple week options that can swing but it seems everything is a gamble in stocks these days
OMG love this video. The best ODTE explanation. I always enjoyed your videos and learned a lot about options trading from you. Thank you!
Thanks for the view and feedback!
Good video. Thumbs up. But one very important thing is the expiration and the time to close positions.
very good information here, i really appreciate all your videos. thank you man
Chris, please make an ODTE options course with two strategies: one for buying calls and one for buying puts.
Your way of explaining stuff is simply astounding :) Thanks.
Makes me so happy to get comments like this. Thanks so much for letting me know! Many more to come :D
Scaling out sounds good. Ty!
I've been waiting for this!
Thank you!
Hope you enjoyed it!
TOP! very useful video. not for my mindset; too vol, too time deacy... it seems a bet, but very interesting video. thanks
I have played with 0DTE. Yes, they are cheap, but very volatile. I have watched my positions go to zero/expire worthless before my bespectacled eyes. Do you set a mental stop, or a physical stop? I have many people advise just setting a mental stop. With a physical stop, market markers will wipe you out clean
I sure hope my sold options expire worthless… that’s what I’m counting on and is the whole point of trading the zeros.
Zero dte can be safe but you need to backtest time frames and be okay with small profits on safe trades and scale those
Chris You're Undoubtably !! The AAAA1 Best:( 0DTE Options ) Investing & Variety Investment Markets Coach On: TH-cam So: Precise/ Complete/& Thorough In Explaining Everything, What A Blessing you Are To So Many !! Thanks A Million My Man & May God Continue His 4Ever Blessings Upon You Chris, 😃🙏
Loved this! So much clarity
Thanks for letting me know!
Excellent video - the only part that seem weak is the explanation of how the losses can occur in using ODTE Call or Put - beside that Chris - you have an excellent way of giving your knowledge to and explanation options to others
Thank you for the feedback! I kind of assumed viewers had knowledge of options basics here but I guess I shouldn't have assumed that.
Your videos are excellent material to learn options and trading in general but I think It's important to show the losses using numbers
Missed your videos brother. Thank you and welcome back
Much appreciated! I am happy to be making content again and want to ramp up productions again. Anything you want to see?
@@projectfinance thank you again. Your channel covers everything from A to Z so you are on top of it.
I"ve only done this maybe three times. Each time, my hand was shaking so much as I pushed the buttons to make the trades that I almost physically couldn't do it. It makes me think I'm not cut out for it.
Good presentation as always, have you played with 0dte credit spreads ?
Best way to learn is to paper trade $SPY. Buy one call and one put throughout the day.🍻
Thanks for your videos
Can you explain how the OCC can exercise your options if they are in the money at expiration
Thank you for blinking your eyes - and moving your head 😂 Learned options thanks to you glad you’re back.
Awesome video. Thanks for the explanation
Thank you!
Will you purchase the contracts right at market open?
thanks
Nice.. Thanks..
Where can we get the live option chain for 0DTE option and basis what do we take the trade.
Great video! Thanks!
Thanks for the comment!
Are spy and qqq puts settled as cash or are you assigned the etf when it closes out of the money? Also is it taxed the same as the spx index, some short term and some long term?
What do you think about selling puts to collect the premium using a negative beta stock/ETF with 0DTE?
Can you please do a similar video on futures mainly ES plz
0DTE iron condors with 95% OTM puts work very well for me...
What time do you open your trade? Do you let it expired or close witl % profit/loss?
I go naked but I’ll look into condors.
@@fernandodavidez757😂😂😂😂😂
Nice
Can someone explain ODTE as it played out on the Dec 20 trading day ?
buying 0-DTE calls or put are cheaper than longer time. But the instrument should move in the right direction. if we long them. There are other complex strategies where the 0-DTE are more expensive than the longer term.
0dte are actually safe if you back test a time frame and have a good plan and strategy and know well what ur trading. If you just try it and do anything you will lose. Most strategies or dte choices are not wrong but its the time frame u use. Like entering last hr of the session rather than the first
Well said!
Great video Chris. Beside SPY, SPX, … which securities offer daily options? I wanted to diversify, not trading only one security such as SPY or SPX. Thanks
Only the big index ETFs have daily 0 DTE expirations (to my knowledge). Other than that, individual stocks have weeklies so they will be 0-4 DTE depending on the day of the week.
hey, do you know whether one can get price history data for historical 0dte strikes somewhere? e.g. in interactive brokers on can see the price history for the strikes of the current day and some future strikes (and the history is limited to a few weeks), but I cannot go back in time, e.g., not do I know whether the history shown is the full history.
I am looking for price history specifically, not singular prices, as I would like to look at the price dynamics a bit. Great video!
Thanks! The only way I know of is to buy minute data from cboe datashop. That’s what I’ve used for this video. You’ll need to be able to work with the data programmatically otherwise it may be too difficult to work through even one days data. You could also use a backtesting software like optionnet explorer which has intraday data.
Thank you Chris for the video. I just would like to ask you. Do you know if I’m a 0dte seller and I don’t close my position at the end of the day and my option is ITM. At what time during that expiration day the game would be over? At 4.15.00P.M et or with the closing price at 4.00.00pm et? What time would be the settlement, so that I would not be assigned after market ours if there is a sudden change after market closes.
It would be the closing stock price on expiration day
thank you@@projectfinance
If a normal option is expiring on the same day, is it considered a 0DTE option on it's last day? Would the price of a normal option be equal to the 0DTE if they are expiring the same day with same strike price?
Yes it is. Any option expiring that day is 0DTE. I guess by “normal” you mean in the standard expiration cycles? Tomorrow the standard monthly November cycle will be 0 DTE.
As a Forex trader this is super interesting
So essentially it is best to buy 0dte trades with strikes closer to the stock price as returns are higher than purchasing strikes that are further OTM? Returns are much greater when we are ITM as opposed to chasing OTM trades
Right, I usually go slightly OTM. $1-$2 OTM for SPY/QQQ.
Uhhhh....the way the question is worded I would answer that the probability of profit is higher close to ATM or ITM, and therefore you might experience "higher returns" due to not losing as often. But if you hit one OTM banger for 130000% you could eclipse 50 years worth of small ATM returns in an hour. Not that I'd ever try to bottle that particular type of lightning.......or recommend it to anyone.
are you on LinkedIn? just asking my self if you post something there and it would be easier for me to read your post. If yes, can you provide the link. Thank you Chris
How would you recommend (If you recommend) selling these kind of Financial derivatives, or FD's?
If I were to do it I would be looking at the support/resistance zones on a 15-65 minute time frame and then enter trades on a 2-5 minute time frame. I would do credit spreads only. No naked short options. So if SPY or QQQ were approaching a resistance zone, I would place the short strike above the resistance zone and buy an option higher to create the spread. If the stock rejects the zone and heads lower, the spread would lose value quickly. If the stock chops around for a bit and also doesn't breach the zone, the spread would decay quickly. And if the stock broke the resistance zone and held it I would probably close the spread. The same approach could be used for the downside. Just some ideas!
@projectfinance I assume you set your stop at 1X or 2X net of credit received on your credit spreads on 0DTE trades? For credit spreads do you also scale out to take some profits or do you let them expired but will tighten your stop as expiration is getting near?
Why the SPX 0DTE moves so fast between 03:50 to 04:00pm est? Any particular reason?
If the option's strike price is near the stock price in the final moments before expiration, we could see the option's price go from zero to a big number very fast.
If the strike is $500 and SPY is at $499 at 3:50pm, the 500 call will be expiring worthless if SPY doesn't go up more than $1.00 in the final 10 minutes of the session, which means the 500 call will be worth nearly zero.
However, if SPY goes from $499 to $501 in the final 5 minutes of the day, the 500 call will go from basically zero to $1.00 in the last 5 minutes.
That's why any at-the-money options can be extremely volatile in the final moments of the day when they expire.
@@projectfinance Yep, that's when gamma is highest.
What trading platform are you using?
tastytrade. Here's a page with funding bonuses and pricing/features if interested: info.tastytrade.com/projectfinance
@@projectfinance I like the look. I might switch.
Why would you not take the full profit. If the option goes to 1.20 why not sell the lot?
The logic would be that if your strategy is to close the full position at 20% profits, you're cutting yourself short on winning positions and it'll be easier to become net unprofitable when you have losing trades.
If you cut winners at 20% and losers at 20%, you need a 50%+ win rate to make money.
If you cut winners at 20% and losers at 50%, you need to win 71% of the time to break even.
If you can push for higher profits and make an average of 50% gains on winning trades and lose 30% on unprofitable trades, you will make money with a lower-than-50% win rate.
^ Assumes all trades are sized the same in dollar terms.
So by holding a portion of the position and pushing for higher profits, you can milk more value from the winning trades which will help cushion against losses that are inevitable, and reduce your required win rate.
I ♥ them
SPY/QQQ? What's your product?
Me too! I’ve been trading the zeros almost daily for a few months now since I learned about them from Dan Sheridan. Very pleased with the results.
My method with odte is when I purchase the contract, I know that money is got. So that takes the stress out of it 😊
So to do 0DTE you need how much in your account?
Could do a few hundred dollars since the contracts are so cheap, but more is better so you can size smaller in % terms of your account.
I’ve been seeing a lot of 0DTE videos on TH-cam and 0DTE posts on Reddit lately… suspicious
For the demo example at 9:22, SHOULD USE the previous same 0DTE on SPY as a REAL operating strategy; rather than using hypothetical theory cuz you forgot the most important factor on this super hyper-IV game which the game rule is totally different from the average.
they weren't even doing those until El Jefe put them on.
Isn't this day trading?
Yes, and shoot! I forgot to mention the day trading implications for this. If you have
@@projectfinanceThe rule that was set for pattern day trading is a subtle way to say you shouldn’t even think about day trading with a 25k account. A 100k account is more like it.
Yes! But if you trade cash settled like spx and let them expire worthless you won't get charged a trade. Only let expire with Cash Settled!! For one spx bear call spread or Bull put spread you will need $500 per contract
Hero zero trade bata rha hai roj khele hai yeh hum
Cheap for a reason besides 0DTE
I am guessing you're saying they're junk!
@@projectfinanceexactly
No thanks
Fair!
very misleading videos. High gamma, low vol, razor-thin edge. And with stop-loss it is even worse.
I didn't feel this was misleading in any way. I clearly outlined the high-risk profile of 0DTE trading. Where do you feel I misled? Your feedback is appreciated.
I’m also curious what is misleading here … thanks for video!
Chris Excellent.
Thank you!!
Chris excellent.
Thank you!🙏🏼