SPX 0DTE SPREAD MANAGEMENT

In this video, I'm going to recap an SPX 0DTE Spread Management

This was a late day, 0DTE, Call Debit spread that turned into a Risk FREE call spread that made money regardless whether the underlying went up, down or went nowhere.

I hope you find this information useful and maybe you can implement this style of risk management in your own trading.

If you find this useful, please subscribe to the channel, like this video and share it with someone you think can benefit from it.

For this trade I used same day expiration options in the S&P500 Index, ticker SPX.

1. With SPX trading around 3975, this trade started as a simple 3970/3980 Call Debit spread for 4.80 debit. My risk in this trade was $2,880 dollars for a total of 6 contracts.

2. As the market started to break above day's highs, I went ahead and closed 3 of the 6 spreads for 5.90 credit, taking back $1,770. This left me with 3 spreads and risk of $1,110.

3. As the market started to pull back, I went ahead and rolled the long 3970 call up to 3975 strike for 3.30 credit, collecting $990 and reducing my risk from $1,110 to $120. This adjustment also reduced my upside
potential profit from $1,890 to $1,380. This is the price one has to pay for being able to remove risk from the trade.

4. As the market pushed back towards the highs, I closed the 2 of the remaining spreads for 2.75 each, collecting $550. Now my risk in this trade went from $120 to 0. Actually, I was left with a NET credit
in the remaining 1 call spread. Before this last adjustment I had a debit of $120 and by collecting $550, I was left with a NET credit of $430.

So now I have (1) 5 point wide call spread at a NET credit of 4.30. This means that if SPX expires above 3980 this spread can be worth $500 plus the $430 credit I collected making last 3 adjustment.

Now, what if SPX falls and closes below 3975? My long and short option will expire worthless and I get to keep just the $430 credit.

Win/Win, right?

SPX expired at 3979.87

So what is the value of my remaining 3975/3980 call spread?

The long 3975 call is 4.87 ITM and is worth $487.

The short 3980 call expired worthless.

So my long option is worth $487 plus the $430 credit I collected making adjustments, this trade has a profit of $917.

You can also think of it like this.

Initial risk $2,880
Profit $917

That's a 30% return on risk in less than 2 hours.

If you enjoyed this video, please consider subscribing to the channel, liking the video and leave a comment if you do something similar in your trading.

Until next time, take care of the risk while the profits take care of themselves.

Our Services:
Income Navigator Trade Alert Service:
---------------------------------------------------
Open an account at Tastyworks using MRTOPTICK referral code and get access to Income Navigator or Active Trader for FREE for 3 months:
---------------------------------------------------
30 Day Trial to OptionNetExplorer at 80% OFF:

[KT-zxjr]

Re-watched. Great trade. You always tighten your risk vs just selling the whole spread in profit. Its good thinking. Roll calls up when profits appear to de-risk. Puts, roll down. Good stuff n thanks.

[KT-zxjr]

Nice trade. So in short, if the market moves up, roll up call sprds to reduce risk and if the mkt moves down, roll down put spreads to do the same. Thanks

[orlandoo]

Good video. That Trade was never tested for the price right? you just adjusted the risk but you were always in profit from step 2. thanks

[nixodian]

Nice video, we love to subscribe and like but you don’t address what to do if it doesn’t go your way. So if you’re in the call Deb spread and the market moves down, what do you do? Do you look at your deltas or the total that that you entered to manage? Let us know thanks

[memories-fhfd]

is there a way to go about this without incuring day trades?