Read a comment on here a few days ago about a small take profit order strategy of 10% on Intraday SPY. Basically enter a 0DTE 1-3 OTM call/put depending on trend and set a take profit for 10%. Super simple but obviously small gains. I would set a stop loss at 30% on these orders. So if I bought $1,000 of a contract I should walk away with $100 profit or a $300 loss. I would imagine after great practice of catching a good entry points this strategy should have at least a 80% win rate (if not more) Does anyone else implement this type of strategy and what are the pro’s/cons per your experiences?
Posted by gdh0615
3 Comments
Yes, you have about a 4 percent of success in the long term . Most day traders don’t last.
If you upgrade to swing trading, you have about a 10 percent chance of making it.
I’m more of a position trader who participates in some swings. I don’t mind volatility going up, and down long as the trend stays the same.
^this is where most get it wrong timing it.
What makes you think it will be an 80%+ win rate? The problem I’ve had with 0dte, especially directional naked plays, one wrong move and the money is gone. Your entries need to be very precise and probably taken in the first hour or so of open.
I only play 0dte when stocks are at a key price level near opening bell and play the bounce/fade off of that level. They’re hit or miss and I generally prefer some longer term contracts.
I just can’t see a 3:1 risk reward playing 0dte paying off long term
I mean you can but to be safe, you have to wait for SPY to swing. For me, I need to check the IV level first. If no rate decisions or major data come out, watch the IV to predict how much it usually swings. Say big days usually have 1.5 to 2% up or down from the previous close. If you see it goes up or go down 1%, you can sell more than 1% out of that direction. 1.5 to 2 to be safe. It’s very rare that the SPY goes more than 2% from previous close (eg. The rate cut the other day still was SPY only close to 2% then close below 2%). The down side of this is you need some kind of alarm or something to tell you that it approaches 1%. Plus, you may wait the whole day and it doesn’t get there or get there late and the premium would be too low. But yeah, 10% on 1000 max loss is possible for 0 if you sell on both sides. You just need more data to know the IV level and how much it typically swings at that IV level. Then you can sell and add in a little room in case it goes a little more than what you expect and it will. For 0 DTE, 1 bad move means you get a big loss so be extra safe before getting in a position because you won’t be able to do much to defend it