Managing 0 DTE Options Risk | Zero Days to Expiration Crash Course

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[TL-rf]

I do 0DTE balanced FLYs on SPX later in the day between 1pm and 3pm EST., noting the average of the highest open interest call and put strikes at market open, then note the highest volume averages between the call and put strikes on the options chain and the options time and sales through the day for an pin estimate. When gamma increases slowly and follows a strike within those averages I am usually within 5 points of the close. Low implied vol. makes the spread more expensive compared to higher implied volatility/expected moves. Usually works better during balancing days rather than rip your face off rallies or dumps. I usually close the FLY close to market close rather than waiting for the EOD close on SPX at 4pm before the late day bots and market makers scratch portions of your winnings.

[milton]

I trade 0dte bc of defined risk AND bc they’re cheap. I prefer to watch the stock without using Butterfly’s, etc. I scalp but will hold longer if trend is present. The leverage and defined risk makes this the perfect vehicle for me personally. I apply technical analysis to the chart, i.e., supply/demand, T-lines and the 20 & 200 sma. I keep loses small and end my day at my planned area of profit. 1-3 trades total on any day and no more.

[mythotical]

What about a swap? On SPY, I'll often trade 3 DTE debit spreads. If the underlying moves in my favor I will often sell a credit spread with the same width and sharing the same short strike. This strategy will lock profit with a net credit, and if it is still OTM it has a chance of max profit on the expiration day. If the short leg is threatened, I simply manage the position by closing it. I also use this strategy on equities with 15-30 DTE if I am expecting a trend. Last year I was able to swap a debit spread and lock in 2, 400% on TSLA and then close the butterfly on expiration day for an additional 1, 200% because my cost on the debit spreads was only $0.04 on $5 wide.

[dansfunnyvideos]

From my experience, the SPX Expected Move is usually much smaller that the actual price move most of the time. And these flies will quickly turn into a loss when there are trend days, which also seem to be happening more and more. The price trend moves too quickly outside your P/L tent before you can capture Theta.
Also, I found that Iron Butterflies were much easier to enter, exit, and roll than straight flies. It's more difficult to get a reasonable price market for the ITM legs of a fly than the OTM legs of an IB.

[bulmascouter]

This channel is unique source of information, many hope you never stop

[phillipborghuis]

This was not your best explanation guys. I came away more confused. A risk curve would be helpful to see as would example positions.

[hc]

Great content and channel! I have a smaller account and trade $10 wide
0DTE SPX butterflies for $1 or less per contract. My strategy is buying 4 lots, selling 2 at 100%, 1 at 200%, and let the last one ride. Max gain is 1000% if it pins.

Obviously doesn't work everytime but my win rate is around 40% give or take.

[jackcheadle]

To be clear on that last slide (not the take aways). There is a 75% chance of making a 25% profit on any of those?

[ACR]

11:30 this is key - love this. The idea of butterflies always intrigued me, but they were never meaningful in their movement until expiration.

[qtube]

I am a little confused are you buying butterflies for a debit and then selling them before close for a profit target of 25-50%? Also what is an example of this trade would it be Buy $3885 Sell 2 $3915 Buy $3945 Calls(SPX Closed Friday at $3916) for a debit? I wish they would put an example trade or something visually, but I still appreciate the content!

[Tailgun]

What about a 30-wide butterfly that's out of the money? Place your pin strikes at a point where the cost is approx 1/10th the width, insuring a 1:9 (or greater) risk to reward ratio? This could be a daily SPX strategy taking advantage of an asymmetrical R:R, even using multiple flys on the same 0DTE.

[myrealtv]

This research was very interesting and informative. Can you also do the same backtest with an Iron Condor at 50 delta, 40 delta, 30 delta and 25 delta with $10, $15, $20, $25 and $30 wings please?

[nevinyoung]

The good thing about these is if you put on something like a 30 wide, it does not lose much value unless you get either really late in the day or really far out of range. As long as it stays in range, you can wait to cut it only if it goes outside range and then maybe only lose 100-200.

[allaccess]

Long butterflies need to be asymmetric for long term profit. Call fly to the upside and out down.

[finanzferdinand]

This show is too technical for beginners but I certainly still rate it

[ShoresOfHelll]

So this is a debit trade, . Why is debit low when IV and expected movie is high?

[usaever]

Tom I MISS the Trader's Expo in NYC! When will it come back to the NY Marriott? Yes they tried going to the one in Brooklyn but that area is dead! The Times Square area is where the action is! I miss you guys! I'm sure you guys can find a way to bring that back if you want to and you have the money to make that happen! Think about it, this is just a once a year event! It was good times! Greetings!!!

[dexy]

Hi guys, how do you calculate the expected movement for this strategy?

[tinaxia]

I got a few questions on slide 2 (4’’) 1. ATM body + 30 wide wings, does this mean the two short options are ATM? and the long options one is 30 ITM and another is 30 OTM? 2. In the example, it is call butter fly, is the conclusion same for puts butterfly? 3. I find the bid-ask spread is huge for butterfly (no matter call or put), how much is this impact the profit? Thanks!

[akalksander]

The probabilities make sense. I trade short butterflies at the beginning of the day and when volatility is high the premium is lower.