The most important thing you left out in your video is the fact that rolling a credit spread means that you're essentially closing out your earlier spread, taking a loss and opening a new one. You may think that you're getting a credit by rolling the option - because you're doing the selling and buying in one ticket. But in reality, you'll get the same P&L if you close out your trade and buy another spread.
rolling is a simple way to track your current P/L for that trade and delay realization. One of the most famous Condor traders had a fund that was shut down for misrepresentation bc they always rolled but didn't show losses on their statements. They called it fraud basically. Even though it is a strategy. They had a average 25% return yoy for 13 years until they got closed. It really does work.
This was a great lesson. You don’t really find people trade SPX well and include a trade plan in different strategy so I really appreciate it and I’ll be checking out more of your videos. Thank you.
You've provided more information in this video than many SPX trading services provide. Especially the sections on Rolling trades when you are getting in trouble. I subscribe to a service that never provided information on what to do when it's going in the money. Thank you.
I wait until the Vol happens in the morning and take a 20 -30 delta credit with the trend The actual risk is much lower than the delta in most cases. You can walk away with hundreds everyday as long as thereis reasonable IV in the market. placing trades at the open is a direction gamble. except the market to move near any condor position with in the first 90 mins. Vol is not always price action so you can get good deal mid morning and plenty of decay. Much less management. plus you can double the contract later for extra premium. I don't like condors usually bc of Put skew and constant adjustment.
Hi I have a question: assume the 0dte bull put spread is ITM, but just barely, and it's only 15 minutes before market close. What's the best way of preventing/hedging the risk that the market crash in the last 15 minutes and destroy my ITM spread? It's too late to close this 0dte spread as the market is about to close and there isn't enough liquidity for this particular spread. Should I open a 1dte bear call spread as a hedge? What would you do?
Thank you very very much. I started my Trading this year. I having been doing 1 DTE SPX Iron Condors every day. I have mostly done 4 contracts per day. I have a Win Rate of 86% But, still sitting at 10K loss for the year. Recently reduced to 1 contract per day. Your rolling strategy is awesome. Now, I know how to cut my losses and win every month.
Try the OCO bracket order if you trade on TastyTrade or ThinkorSwim. I usually set my take profit to 80% and 125% stop loss. I learned it the hard way by selling a premium for $45 at 10:20 a.m It went down to $5 by 11:45 a.m. I didn't close it, and by the end of the day, it went up to 100$, then I had to close for a loss. I have set the template that allows me to sell my 0DTE spreads in one click, including take profit and stop loss, a set, and forget style. I just have to check 3 hours later to know if I have won or lost. With this technique, I don't enter right at the market open. I wait until 10:30 a.m. to see the market direction and trade with the trend. If you collect a big premium and don't win, the trade is still worthless.
Risk to Reward when the Order gets Filled is about 10:1 or 12:1 Since I Close my Orders on average with 50% profit. The effective Risk to Reward is 20:1 or 24:1 Probably the other way to say is 1 loss wipes out the profit from 24 days. So even though my Win Rate is very good on paper, since I don't have a Proper Exit or Roll strategy, the losses are Huge. I hope to get corrected working with Al. let's see 🤞
Thanks for your video. I do wish you wouldn't use the "bull spread" and "bear spread" terms. Ambiguous (to me at least) Seems much more clear to say "put credit spread" or "call debit spread" ETC. Just my opinion. Thanks
Great video Al. Question- let’s say a 0 DTE position is tested at noon and you roll one day out. If that rolled strike is further tested that same day at say 3pm, do you simply kick the can down the road and roll into what would be day 2? Are you ever packing it in and accepting the loss or is your expectation that the market will eventually cooperate and you’ll be able to close out properly for a cumulative profit no matter how many times you’re forced to roll?
Great video, appreciated! Just a question, could you share how much in percentage you need to roll out the put credit spread for SPX 0 DTE? Look forward to your answer, thanks!
I have seen other videos on 0 dte butterfly and iron butterfly. Have you tried that? I am looking to experiment with different 0 dte strategies in my paper trading account. Thanks
Why not wait until 1030 am and enter an iron butterfly. I then always exit my position at 12 Noon. If volatility increases from open to 10:30am I don't put a trade on. Same with VOLD. If it's higher than 2 no trade
Thank you for the Teaching! Could you talk more about rolling? in another vedio? does a 0DTE is good for rolling? at what time of the day to roll out, how far?
Thank you, I have been reviewing alot of 0DTE strategies, and people tend to acknowledge that market changes dictate changes/tweaks in strategies, so did it change for you in late 2024?
Easiest way to deal with PDT is box trade. So it’s same as closing the trade but u let them both expire. U end up paying trading commission to avoid PDT.
I use a box spread frequently. The credit received allows me to open an overnight position such as an iron condor or gives the necessary cash to close one side of a iron condor if you are over extended. I usually sell for $4.95.
Can u even trade $spx with less than 25k? IBKR won’t let u. Also when you roll, what do you do the next day it opens deep ITM? Roll again immediately or your let it play out for a few hours.
you can trade SPX as long as you are running spreads and have reserves. or XSP which is the micro version. you can't roll ITM for credit in close time frames. You need to roll up and out, or Down and out when the price is approaching your contract price, say with in 10-15 points on the SPX. just rolling out can get you killed bc that maybe a new trend. Roll to get a credit is just delaying a loss not preventing it. You need to roll to a reasonably safe place outside trend.
How did you pay $0 commission on option trade in TOS/Charles Schwab? I have to pay 65c + exchange fee of 15c per contract! I would be a lot more profitable if I don’t have to pay commission! Please enlighten me!🙏
It would have been useful to show theta decay intraday on 0DTEs instead of theta decay on 68 day options. Theta decay is exponential and my sense is that buying at the open may not be ideal. Have you explored buying before lunch break (12 pm). During a ranging day, theta decay will really not be significant until the PM session, and especially during the last hour.
Your video is excellent! I'm wondering if my put is rolled out for more than 1 day, should I create iron condor with expiration same as my put expiration? Or should I do call spread every day before my put expiration.
Thanks! It’s a good idea to add the call especially if your put is already profitable. It’s good to give the call distance from the market. With the same expiration, there no additional margin required.
My biggest problem with Vertical spreads is that a lot of times you can't sell out of a spread. You might Have to leg out. This can change profitability of trade. If i sell a vertical spread I want to collect at least $2.50 credit on $5.00 wide spread. Or $500 credit on a $10 wide spread. Etc. Otherwise risk to reward doesn't make sense to me. If i sell vertical & collect $0.60 = $60. $5 widespread. Max loss $440. I know I have a higher probability of success but the potential loss percentage wise is too great. . If i bu😊y a vertical spread & pay $60. Max profit $500. I can't lose more than what I paid. I know statistically a lower probability of success. Probability should sell as soon as you double money.
You need to use a 10 to 12 delta or you’re going to be stuck. When the trade is threatened, you need to adjust it. Download my trade plan and follow it. My next video is on Aug 27th and will help you.
I been an option seller since 2014. No good option seller will take max loss. At most is 3x. So your scenario is $180. This yr I’m even using 1x max loss with an algo trading IC. So your scenario is you rather have 80% winrate to make $60 or 34% winrate to lose $60. The mkt is so efficient these days, seller will always have the probability edge compare to option buyers. As itm option is naturally at 34% odds for buyer and 63% for the seller.
If you need to roll the put spread from today to tomorrow, will you still enter a new put spread tomorrow or will you just keep the rolled put spread from yesterday?
I’m confused, can you elaborate? If your put spread is threatened and you roll down the strike and to the next day, but market keeps dropping during the rest of the day, it would make sense roll down and to the following day? So now 2 days out?
Just a question. Why not close when the trend is against you and open the trade in the opposite direction? You will not have to roll 3 times. Some of the guys will exit at 1.5x stop loss and wait for an opportunity to re-enter.
I wouldn’t try to reverse my position since the market might reverse and and you have a double loss but closing a position using a stop loss may make sense in the midst of a 5% correction.
I think as long as theta decay is happening, one can be in the trade even in the opposite direction. But if IV spikes, or you get gamma moves, better run. 1.5x is too tight an SL. I think 2x works better.
Do you have to take a loss when rolling out options? Let's say, I have a contract for $500, it went down to $300. If I roll it, I can only get $300 worth of options right? That ends to taking $200 loss.
This is a really outdated video. as of this day VIX is at 14 and you're teaching 0 DTE with VIX at the high 20's. Edit: The selling at 5/6 delta works but rolling them for credit is much more difficult in this lower VIX environment. And yes you are correct. I am not experienced, just a student of trading options.
Stop guessing and review my performance! Volatility is relative to the current market conditions. If you were an experienced trader, you would know that. Obviously you’re not.
He discusses VIX from 10 to 25 and impacts on both strike selection and width of the strike during minute 14:00. Knowing how option chains work, that low VIX environment will never allow one to select the target credit received because that $ amount would be too low. VIX is critically important yes to trading credit spreads in general. Your idea that this strategy doesn't work is a generalized statement and does not consider the entirety of all the criteria in the trading plan. My experiences include 4 years live trading as well as 14 months, mostly paper trading SPX/XSP credit spreads and iron condors in the 0 dte to 30 dte timeframe. I found this video instructive and highly valuable
These trades are a sure way for you to lose everything in your account. As the previous commentator said when you roll, you are simply extending your risk. You are not getting away with anything. If loss happens again the next day and then next day after that, you will lose a lot and may even lose everything in your account. The trading strategy of rolling is a recipe for disaster. Only amateurs roll this way. Don't do it. You will learn your lesson only after you lose your entire account. Take it from someone who has been trading professionally for 30 year.
Download my Free SPX Trade Plan: bit.ly/3fH2Oiy
11 13
The most important thing you left out in your video is the fact that rolling a credit spread means that you're essentially closing out your earlier spread, taking a loss and opening a new one. You may think that you're getting a credit by rolling the option - because you're doing the selling and buying in one ticket. But in reality, you'll get the same P&L if you close out your trade and buy another spread.
rolling is a simple way to track your current P/L for that trade and delay realization. One of the most famous Condor traders had a fund that was shut down for misrepresentation bc they always rolled but didn't show losses on their statements. They called it fraud basically. Even though it is a strategy. They had a average 25% return yoy for 13 years until they got closed. It really does work.
This was a great lesson. You don’t really find people trade SPX well and include a trade plan in different strategy so I really appreciate it and I’ll be checking out more of your videos. Thank you.
You've provided more information in this video than many SPX trading services provide. Especially the sections on Rolling trades when you are getting in trouble. I subscribe to a service that never provided information on what to do when it's going in the money. Thank you.
I wait until the Vol happens in the morning and take a 20 -30 delta credit with the trend The actual risk is much lower than the delta in most cases. You can walk away with hundreds everyday as long as thereis reasonable IV in the market. placing trades at the open is a direction gamble. except the market to move near any condor position with in the first 90 mins. Vol is not always price action so you can get good deal mid morning and plenty of decay. Much less management. plus you can double the contract later for extra premium. I don't like condors usually bc of Put skew and constant adjustment.
Hi I have a question: assume the 0dte bull put spread is ITM, but just barely, and it's only 15 minutes before market close. What's the best way of preventing/hedging the risk that the market crash in the last 15 minutes and destroy my ITM spread? It's too late to close this 0dte spread as the market is about to close and there isn't enough liquidity for this particular spread. Should I open a 1dte bear call spread as a hedge? What would you do?
Thank you very very much. I started my Trading this year. I having been doing 1 DTE SPX Iron Condors every day. I have mostly done 4 contracts per day. I have a Win Rate of 86% But, still sitting at 10K loss for the year. Recently reduced to 1 contract per day.
Your rolling strategy is awesome. Now, I know how to cut my losses and win every month.
Try the OCO bracket order if you trade on TastyTrade or ThinkorSwim. I usually set my take profit to 80% and 125% stop loss. I learned it the hard way by selling a premium for $45 at 10:20 a.m It went down to $5 by 11:45 a.m. I didn't close it, and by the end of the day, it went up to 100$, then I had to close for a loss. I have set the template that allows me to sell my 0DTE spreads in one click, including take profit and stop loss, a set, and forget style. I just have to check 3 hours later to know if I have won or lost. With this technique, I don't enter right at the market open. I wait until 10:30 a.m. to see the market direction and trade with the trend. If you collect a big premium and don't win, the trade is still worthless.
how do you have a stellar win rate with a 10k cumulative loss? whats your Risk to reward typically?
Risk to Reward when the Order gets Filled is about 10:1 or 12:1 Since I Close my Orders on average with 50% profit. The effective Risk to Reward is 20:1 or 24:1
Probably the other way to say is 1 loss wipes out the profit from 24 days. So even though my Win Rate is very good on paper, since I don't have a Proper Exit or Roll strategy, the losses are Huge. I hope to get corrected working with Al. let's see 🤞
Thanks for your video. I do wish you wouldn't use the "bull spread" and "bear spread" terms. Ambiguous (to me at least) Seems much more clear to say "put credit spread" or "call debit spread" ETC. Just my opinion. Thanks
Agree !! Bull spread sounds more like BS LOL😂
Great video Al. Question- let’s say a 0 DTE position is tested at noon and you roll one day out. If that rolled strike is further tested that same day at say 3pm, do you simply kick the can down the road and roll into what would be day 2? Are you ever packing it in and accepting the loss or is your expectation that the market will eventually cooperate and you’ll be able to close out properly for a cumulative profit no matter how many times you’re forced to roll?
Great video, appreciated!
Just a question, could you share how much in percentage you need to roll out the put credit spread for SPX 0 DTE? Look forward to your answer, thanks!
I have seen other videos on 0 dte butterfly and iron butterfly. Have you tried that? I am looking to experiment with different 0 dte strategies in my paper trading account. Thanks
Why not wait until 1030 am and enter an iron butterfly. I then always exit my position at 12 Noon. If volatility increases from open to 10:30am I don't put a trade on. Same with VOLD. If it's higher than 2 no trade
Thank you for the Teaching! Could you talk more about rolling? in another vedio? does a 0DTE is good for rolling? at what time of the day to roll out, how far?
Thank you very much for your valuable content
I'm curious, do you prefer Iron condors or Iron butterfly for 0dte on SPX ?
Thanks, iron condors. I have never been able to understand how to makes returns using iron butterflies.
Excellent video!!
Thank you, I have been reviewing alot of 0DTE strategies, and people tend to acknowledge that market changes dictate changes/tweaks in strategies, so did it change for you in late 2024?
Easiest way to deal with PDT is box trade. So it’s same as closing the trade but u let them both expire. U end up paying trading commission to avoid PDT.
I use a box spread frequently. The credit received allows me to open an overnight position such as an iron condor or gives the necessary cash to close one side of a iron condor if you are over extended. I usually sell for $4.95.
great video, the PDF link is broken where could we acess it? thanks for the pointers!
If a position is threatened why don't you buy back the short put or call and let the long put or call do its thing?
Can u even trade $spx with less than 25k? IBKR won’t let u. Also when you roll, what do you do the next day it opens deep ITM? Roll again immediately or your let it play out for a few hours.
you can trade SPX as long as you are running spreads and have reserves. or XSP which is the micro version. you can't roll ITM for credit in close time frames. You need to roll up and out, or Down and out when the price is approaching your contract price, say with in 10-15 points on the SPX. just rolling out can get you killed bc that maybe a new trend. Roll to get a credit is just delaying a loss not preventing it. You need to roll to a reasonably safe place outside trend.
In performance slide is it weekly daily or monthly
With so little premium/credit collected, wouldn't the brokerage fees alone takes up to 25% of the profit?
How did you pay $0 commission on option trade in TOS/Charles Schwab? I have to pay 65c + exchange fee of 15c per contract! I would be a lot more profitable if I don’t have to pay commission! Please enlighten me!🙏
Can you trade 0 DTE in an IRA if you follow the pattern day trade rules?
Yes
It would have been useful to show theta decay intraday on 0DTEs instead of theta decay on 68 day options. Theta decay is exponential and my sense is that buying at the open may not be ideal. Have you explored buying before lunch break (12 pm). During a ranging day, theta decay will really not be significant until the PM session, and especially during the last hour.
How about 0.02 delta you can make the same $ but selling the put much further out but not buying the lower put?
Thank you for the vidja! What is the PLI Indicator Add On??
Thanks! We no longer support the PLI indicator an indicator. Where did you see that?
@@SimpleOptionStrategies It was crossed out on your website. LIsted it but it was crossed out.
Your video is excellent! I'm wondering if my put is rolled out for more than 1 day, should I create iron condor with expiration same as my put expiration? Or should I do call spread every day before my put expiration.
Thanks! It’s a good idea to add the call especially if your put is already profitable. It’s good to give the call distance from the market. With the same expiration, there no additional margin required.
My biggest problem with Vertical spreads is that a lot of times you can't sell out of a spread. You might Have to leg out. This can change profitability of trade.
If i sell a vertical spread I want to collect at least $2.50 credit on $5.00 wide spread. Or $500 credit on a $10 wide spread. Etc.
Otherwise risk to reward doesn't make sense to me.
If i sell vertical & collect $0.60 = $60. $5 widespread. Max loss $440. I know I have a higher probability of success but the potential loss percentage wise is too great. .
If i bu😊y a vertical spread & pay $60. Max profit $500. I can't lose more than what I paid. I know statistically a lower probability of success. Probability should sell as soon as you double money.
You need to use a 10 to 12 delta or you’re going to be stuck. When the trade is threatened, you need to adjust it. Download my trade plan and follow it. My next video is on Aug 27th and will help you.
how *liquid* are the underlyings that you're trading on? Typically, low liquidity will be the reason your exit orders don't get filled.
I been an option seller since 2014. No good option seller will take max loss. At most is 3x. So your scenario is $180. This yr I’m even using 1x max loss with an algo trading IC. So your scenario is you rather have 80% winrate to make $60 or 34% winrate to lose $60. The mkt is so efficient these days, seller will always have the probability edge compare to option buyers. As itm option is naturally at 34% odds for buyer and 63% for the seller.
If you need to roll the put spread from today to tomorrow, will you still enter a new put spread tomorrow or will you just keep the rolled put spread from yesterday?
I enter a new put spread regardless with the exception of having the same strikes on the following day. But that rarely happens.
Would you roll the Put more than once in the same day if the strike you roll to is threatened again? Or do you exit with a stop loss the second time?
No, I’ll widen it and move out the next day.
“Out the next day”, isn’t that just rolling it to the next day?
I’m confused, can you elaborate? If your put spread is threatened and you roll down the strike and to the next day, but market keeps dropping during the rest of the day, it would make sense roll down and to the following day? So now 2 days out?
what is the best time to trade 0DTE option in last 1/2 hr ?
That’s a directional trade and I don’t trade that way, but I know others that do and they trade pretty well.
Just a question. Why not close when the trend is against you and open the trade in the opposite direction? You will not have to roll 3 times. Some of the guys will exit at 1.5x stop loss and wait for an opportunity to re-enter.
I wouldn’t try to reverse my position since the market might reverse and and you have a double loss but closing a position using a stop loss may make sense in the midst of a 5% correction.
@@SimpleOptionStrategies Thanks. Really helpful.
I think as long as theta decay is happening, one can be in the trade even in the opposite direction. But if IV spikes, or you get gamma moves, better run. 1.5x is too tight an SL. I think 2x works better.
@@dhirajsinha2001 I need to expend some brain cells to evaluate this comment, thx
Do you have to take a loss when rolling out options? Let's say, I have a contract for $500, it went down to $300. If I roll it, I can only get $300 worth of options right?
That ends to taking $200 loss.
IBL?
delta?
Did you backtest this strategy or just hope for the best?
I have 5 years of my own trading and detailed performance. I don’t trade on hope.
What happens if you roll 1 more day and the market gaps up or down overnight?
I widen trades and I’m able to manage them. The key is to trade small so it does interfere with your margin.
I guess rolling spreads basically means it is not really 0DTE.
Do you ever use five wide spreads?
I used to and it does have the advantage of being able to widen a spread much further than a 10 wide.
So these are NOT 0 DTE trades.
You are taking a loss in your rolling and going out 1-3 days to re-establish the position.
This is a really outdated video. as of this day VIX is at 14 and you're teaching 0 DTE with VIX at the high 20's. Edit: The selling at 5/6 delta works but rolling them for credit is much more difficult in this lower VIX environment. And yes you are correct. I am not experienced, just a student of trading options.
Stop guessing and review my performance! Volatility is relative to the current market conditions. If you were an experienced trader, you would know that. Obviously you’re not.
He discusses VIX from 10 to 25 and impacts on both strike selection and width of the strike during minute 14:00. Knowing how option chains work, that low VIX environment will never allow one to select the target credit received because that $ amount would be too low. VIX is critically important yes to trading credit spreads in general. Your idea that this strategy doesn't work is a generalized statement and does not consider the entirety of all the criteria in the trading plan. My experiences include 4 years live trading as well as 14 months, mostly paper trading SPX/XSP credit spreads and iron condors in the 0 dte to 30 dte timeframe. I found this video instructive and highly valuable
@@SimpleOptionStrategies ouch. Be nicer.
Good video
Can you put Hebrew language subtitles in your videos?
Thank you
First ten minutes is about nothing related to the topic..
Legends like you is what is good about youtube
Thanks
rolling means he closed out one side of the trade and started another one...big deal...
These trades are a sure way for you to lose everything in your account. As the previous commentator said when you roll, you are simply extending your risk. You are not getting away with anything. If loss happens again the next day and then next day after that, you will lose a lot and may even lose everything in your account. The trading strategy of rolling is a recipe for disaster. Only amateurs roll this way. Don't do it. You will learn your lesson only after you lose your entire account. Take it from someone who has been trading professionally for 30 year.
I want to take it of this professionally trader for over 30 year and hopefully successful. What's his name?