He guys, I jumped back into trading last month and systematically lost 50% of my account before I threw in the towel. Im sharing my strategy to see if how stupid it was or if it made any sense:
Trading 0DTE SPY:
-Went Delta Neutral with 0.20 delta.
The idea was to look at the nexts days IV and Put/ Call ratio. Ex.) If the next days Put volume was 100k and the call volume was 30k, I would double down on the Put orders and go long.
Not one time did these trades pay off. If put volume was high SPY went up and vice versa. The delta neutral position made absolute zero difference as I ended up losing money on both sides :/
Any idea what I did wrong? Or do I permanently belong at Wallstreetbets?
Sincerely,
Confused Trader
Posted by MOB_Titan
7 Comments
It’s called tuition.
Why would you pay 50% of your portfolio as tuition?
Try selling options 30 – 45 dte and let theta decay help you profit. Theta decay is what kills these short duration long options . . .
This just proves that buying options is very hard to have success.
See r/thetagang where many have success selling options. This may include the trader(s) who made profits from your failed trades. ;-D
You were gambling lol
0DTEs took half your account and you still wonder what went wrong. Post this on WSB and my comments would be completely different.
Try trading 0DTE SPX contracts instead. Get those later in the day. SPY contracts move faster in the first half of the day, but not enough to warrant a low risk high profit play. The second half of the day is pretty much pointless to play SPY contracts because they really don’t move at all unless you are buying ITM. SPX 0DTE on the other hand, is your golden nugget in the later half of the day as contracts become cheaper and cheaper as you get closer to close. They move faster and faster too. This minimizes your risk (leverage) and maximizes your profit.
I don’t know if your strategy is good long term or not, you’d have to backtest it (or forward test it) to find out. You’re working on a fairly short timeframe, pretty much day trading. There’s a ton of variance in that, and your results will depend heavily on being able to gauge how the market is currently moving for short term success.
A couple thoughts. If you were losing money with the strategy, would you have made money if you reversed the strategy? Why was put volume high, and did it go up with high puts because that’s normal, or were there market events? For example, were there important ERs that pushed the market up, or fed news?
Also, if you’re on SPY just use a paper account to forward this stuff. Unless you’re buying/selling unusually illiquid options then since SPY is highly liquid it should be fine. Unless your strategy cares a lot about exact fills (ie. high volume strategy that cares a ton about a price difference of 0.05 or so) then you should be able to get a good idea of how your strategy will work without putting money on it.
Also also, be aware the market can change its mind about how it wants to act. For example, just because it goes a few months handing huge increases to any stock that mentions AI in it’s ER doesn’t mean next month it won’t start doing the opposite.
0dte imo has nothing but price so you may as well just daytrade the spy at that point. I don’t think there are safe 0dte trades. I’m also not sure about looking at future options as they will have delta back in that yours don’t