I know that Spreads and Iron Condors are very popular strategies for 0 DTE trading, but how many people here simply buy individual calls and puts? So for example, let the market calm down until 10:30am or so, go long one or the other, and manage it then?
If you prefer verticals, what is your reasoning?
Posted by BankOfDadNC
3 Comments
If you guess wrong about what direction the stock will go and how fast it will get there, you don’t have much runway for a recovery. So directional plays at 0 DTE don’t make much sense in isolation.
However, if you have a long or short equity position that you want to hedge for a day, buying a put or a call on 0 DTE might make sense in that situation.
I scalp 1 dte index calls and puts. If it goes the wrong way I have a stop loss AND delta drops AND if the world shits the bed my max loss is limited. If I’m right I take profit AND delta increases in my direction to get me to target.
I make 10 to 20 bucks per contract and set a protective stop there and let it run. Trade size 20 contracts. WR 74.3% this year so far. Last year 71.6%
I buy them because they are incredibly cheap, especially with how low IV is now, and I don’t use a SL with my trades. So the risk/reward is great with this approach. Especially later in the day. My trade is effectively – I think it will hit this price at some point today. So I’m either right, and I can get a 1-3x reward, or I’m wrong and I lose what i paid for the option.
This is probably debatable but this gives me a 1-1 to 1-3 RR without having to use a SL at all
I don’t think I would be profitable with 0DTEs if I used a SL