0DTE SPX Short Straddle Option Strategy
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Small accounts can use XSP as well. Also cash settled but 1/10th SPX size.
Great stuff Erik.
Thanks, Outlier. I will add these tips to improve my SPY iron butterfly/condor 0DTE trades.
right on
Great content but curious where can we get those studies from top of your charts with all those informations ( IVP, IVR, 5D ADR ...) ???
Appreciated!
Glad you enjoyed the video!
Those are a mix of thinkscripts - some found online and modified, some built by me etc.
how would you effectively use a Odte straddle for something like an FOMC meeting when ita almost a certainty the FED will raise interest rates 25 points?
still plenty of volatility around the event. can trade those very similar to an earnings play / other binary event.
the problem I see with this on the SPY, is that going OOM by only a couple of $$, the spread between the PUT and CALL delta is huge, to sell a $260 P/C straddle (current price $558), the P is -.71 C is -.29, this is way to close to the money to be safe. I would prefer strike of let's say $565, but that puts the P at -.97 and C at -.06, how will this affect the outcome if either direction?
This is interesting. For 2 specific reasons:
1. I learnt not to use stops when trading intraday moves around event and using ADR/ATR to approximate my exit points. Great lesson
2. I was tracking VIX1D today and it was trending up (+20% for the day), so I decided not to enter a short straddle. How did your trade still make money despite the increase in 1day IV? What am I missing here?
Another good one E.
For the stops, I regularly tinker with different tools that give better results for specific strategies in various markets. ADR/ATR typically work pretty well in sideways markets but itâs important to monitor the direction of the movement.
Depending on how you calculate 1DVIX, the product itself uses 2 expirations. But the short answer is even with the increase it wasnât enough compared to IV. Remember, IV lives in time value. At expiration, the residual IV doesn't matter because it's gone. So IV can change a lot but what really matters is where IV was at the onset of the trade and where RV lands at the end.
Thanks!
Thank you so much really appreciate it!!
@esInvests do you use a mental stop loss: i.e: get out if blows the breakevens points or you lose as much as your profit target?
hey man, that's all set before entry but I absolutely plan the exit prior to entry.
I did an iron fly with 30 wings an hour after open. Uses a lot less buying power.
Iron flys can be great for that but if margin requirement is an issue, Iâd simply size down. With an iron fly weâre buying the exact thing weâre assuming to be overpriced. Unnecessary drag long term.
Also ruins your edge
It sure seems like a +/-18 dollar move in SPX is really tight - less than a 0.5% daily move. Maybe all those multiple events in one day cancelled each other out rather than moving the market all in the same direction??
your account must be really something. Only if I put a straddle on SPX, you need about 100 k buying power... so for not so wealthy traders, would you also buy some puts and calls just to define the risk and lower BP?
sure, we can buy the wings if needed but it will serve as drag on the returns. might be a necessary tradeoff but is suboptimal. I still buy the wings at time myself if I'm trying earnings sometimes, etc.
Ok your intro got like & sub đ
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If you are already putting up that much capital in a portfolio margin account why not control your delta with SPY shares? It most likely wouldn't need more capital in a PM account. Plus commissions are free for stock
i tend to size the trades so I don't need to add the hedge to it - reduces long-term drag. if I was concerned about the deltas, I'd simply turn it into an iron fly and leave it alone.
if this was a long straddle, that's different when we can profit from gamma scalping.
It's 69,420,000% analized return
Anytime I see video that says 50x your money in a week, I keep scrolling
As you should
why didnât you just buy the wings for us and turn into a short iron butterfly? Then we could probably afford the trade.
1.0053^365=6.88(588%)
1.0053^250=3.74(274%)
You can hedge with a 35 - 45 DTE long strangle. Effectively creating a 0DTE Diagonal. It may only hedge a bit but more importantly will reduce the BP required significantly.
Mike question for you, how wide are you going on those strangles? 40 delta, 30 delta or just 10 points wide, 5070/5080?
We make money by taking risk, not hedging it away.
Adding the long strangle adds pretty significant drag to maintain. Not what Iâd do.
@@way-starpropertiesllc1842 30 - 45 DTE as far out as a 4 delta as long as you are delta neutral.
@@esInvests Why not put on the strangle hedge if it 1. Reduces BP and 2. Hedges a bit if the trade goes far against you, what's the harm?
@@mcop1 for the reasons above. The hedge drags returns and doesnât actually help that much once cost is factored in.
What kind of account are you trading if you can stand losses of 18080$ x 5 = ca 90;000$ ? Not really retail⊠Even if trading 1 lot it still is a huge lossâŠ