0DTE Strangles Day Trading Option Strategy
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- Äas pĆidĂĄn 2. 08. 2024
- Basic Day Trading Using Options: 0DTE Strangles are a great way to make small amounts of money in only a couple of hours. This strategy works great for day trading ETFs like: SPX, SPY, IWM and QQQ. It's fast moving trade that avoids overnight risk and can be entered on Monday, Wednesday and Friday Expiration dates.
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⏠CONTENTS âŹâŹâŹâŹâŹâŹâŹâŹâŹâŹ
0:00 Intro to 0DTE Strangles
1:00 Setting up 0DTE Strangles Expectation
2:09 Real Sample Data from actual trades
4:57 Calculate Put & Call Breakevens
7:00 Risk: How much can I lose?
9:34 Largest losses of all time
11:52 Real Day trading outcomes
13:02 Pros and Cons of this strategy
14:09 Backtesting Stock and ETF spreadsheet
15:37 Even better trade idea for day trading
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My primary investment strategy is long term high yield dividend investing, index funds and reducing risk and exposure using options. I have been actively trading the stock market for over 25 years and have built most of my wealth by reinvesting my dividends and following my 14 Personal Rules of investing. I actively trade options on both the American and Canadian Stock exchanges using options strategies and buying and holding high yield dividend paying stocks.
I generate monthly income in two ways. Averaging more than an annual 7% return by collecting dividends on high yield dividend stocks that I hold. The second income stream comes from the selling of option premium and taking advantage of theta decay. I love trading strangles, Iron condors and diagonal spread for maximizing returns. Delta neutral strategies allows me to make money in both bull and bear markets and limits my risk. Both of these strategies are suitable for passive income and create a stable predictable safe passive monthly income.
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Fantastic content! Some friends were talking about ODTE strangles. Can't wait to see the details on your back testing sheet! Thanks for your hard work and valuable videos!!!
Thanks!
Re: 15:37 Even better trade idea for day trading - At around 15:50 length on this video, you talked about the slightly different strategy that you open on Mon or Wed or Fri. Which spread sheet should I buy for open/close trades?
good content. thank you
Thanks Andre!
If your options remain well out of the money, you can simply let them expire at the end of the trading day rather than buying to close.
Of course, and something which many new option traders don't know, options can be exercised by the buyer up to 5:30 PM Eastern on the day of expiration. So, if the underlying stock/ETF has a strong price move after hours, and your options move into the money before 5:30PM, it is likely that your options will be exercised and you will find that you may own (or be short) many hundreds of shares on the next day.
This is super important for new investors.
This is a timing bomb strategy, happened to me quite a few times. So I'm speaking from experience, Gamma risk can obliterate these trades in a blink
Yes. that is the high risk portion. My next video may shed some light on why I'm not trading these as strangles.
had a put credit spread get annihilated last week or so. was a 0dte, and my delta was like 0.02 and so far otm, it was a joke. spx dropped 80 points. 80 POINTS and wiped my ass out. not enough capital for a call credit spread, couldn't roll it, etc. i got annihilated. i kept thinking of getting out or the market would go back up. nope. didn't want to set a stop loss because i was on a good winning streak. and this was a snowball trade. i create little snowballs and compound them (i personally don't use stop losses for that as it negates all the gains). had 25 winning trades in a row.
@@chocolatecoveredgummybears well because you didnât make a stop loss lol
@@gaving9463 no. stop losses are garbage
I'm trying this with Bitcoin. The amount of margin required to trade 1BTC is about $5k and the payoff is somewhere between $50-$100, so a minimum of 1%. I'm new so don't know if that's good or not.
I also don't know how to calculate my losses as I've been using an 8 deviation Keltner Channel setting on a 15m chart for my boundaries and haven't had either leg threatened yet.
Admittedly, I'm only in my second week but would love to know how to calculate my potential losses.
I see plenty of information about bringing the unchallenged leg in to even out the deltas, but that's all a bit Russian to me and with 0dte, it's MAYBE wise to close the whole position and take a hit if the price hits the breakeven level or 1X loss maybe, don't you think?
When you calculated worst case scenarios, did you account for the dramatic increase in IV which would happen on a large down move? Thanks for your time.
The extrinsic value decreases to zero at expiration so increased volatility cannot effect the price. The only value at expiration is intrinsic value.
damn your facial hair is nice
Thanks for the amazing comment. Glad to see you watched the video. Hopefully youâre making money trading 0DTE.
@@DrawbridgeFinance lol yessir. well, i was using webull a bit but they made it so we can't roll credit spreads. but then after one of my PCS got annihilated on a 0dte, i switched to tastyworks. then a week later, webull released a news announcement about how they are adding option rolling. i'm just gonna be using tastyworks for my advanced option plays and webull for regular stock trading and basic options like covered calls or whatnot. thx for your videos
Donât most 0DTE traders set a stop loss at 3 times the credit received?
How would we know what "most" 0DTE traders do? This trade could be played as a butterfly to limit loss. I will be releasing a video later today that will show you my spreadsheet and the trades I'm making because of it.
@@DrawbridgeFinance We would know because there are groups who trade 0DTE and the backtests support a 3X stop. It is the most common way to trade 0DTE credit spreads.
I was day trading but trust me it take a lot of time and emotions/energy but anyway this is a youtuber or discord people sell off
For sure we will get richer together :D I just need to open a youtube channel hahaha
This is not a strangle. As soon as you are selling an option against an option purchase, it no longer is a strangle. I trade strangles all the time. A strangle is buying a Call and buying a Put, 0DTE, at different strike prices.
Your wrong
The strategy in the video is called a Short Strangle, selling a put and selling a call, like shorting. The clue is in the name.
You're trading long strangles.
This is crazy risky. This is a strategy to go bankruptâŠ
Thatâs why I made this video.
If this is a strategy to go bankrupt. Shouldnt you be able to do the opposite and be rich? Yet, not the case.