FAQ – Strategy
What is SPX 0 DTE strategy?
SPX weekly options that expire on every Monday, Wednesday and Friday we trade them on the day it expires. So, there is no overnight risk. Usually we open a credit spread when the market open around 9:30 A.M EST, and we close the trade before market close same day around 4:00 P.M EST. That is why it is called 0DTE, AKA same day option trade.
Why 0 DTE strategy?
1. Can Profit if SPX increase, decrease, or doesn’t move at all. (High probability of making money)
2. Limited loss potential. Never worry about “blowing up” when the market makes a huge move (assuming appropriate position size)
3. Very simple strategy. The two primary credit spread strategies only have two components.
4. Consistent daily/weekly income. (why i started trading this strategy personally 🙂 )
What is SPX?
SPX, or the Standard & Poor’s 500 Index, is a stock index based on the 500 largest companies with shares listed for trading on the NYSE or NASDAQ. The term “largest” refers to each firm’s market capitalization or its stock price multiplied by the number of shares it has outstanding.
The SPX itself may not trade, but both futures contracts and options certainly do.
1. SPX Options expire on every Monday, Wednesday and Friday.
2. SPX pays no Dividend.
3. SPX Cash Settled when the market closes at 4:00 P.M EST.
No risk of early assignment and loss of dividends, no portfolio disruption on assignment.
What platform and software do you use?
I am with Interactive Broker, I use TWS to place my order. We have members who use different platform, like ToS, E-Trade, and TastyWork etc.
I use Tradingview, Sierra Chart, and Amp broker with CQG data feed for the /ES futures.
How much capital do I need to trade with this 0 DTE strategy?
You can do it with as little as $500 per contract since SPX minimum spread wide is 5 points, and its multiplier is 100.
You can also do the same strategy on /ES, Futures Contract, with little as $250 since /ES minimum spread wide is 5 points, and its multiplier is 50. (Depends on trading platform)
What is the minimum capital to start with this 0 DTE strategy?
General rule is that you don't allocate more than 20% of your total capital for single strategy, and risk no more than 2-5% for each trade.
So, in general I would recommend start with minimum $2500, and trade One contract only, and risk management of 120-150$ for each trade.
(2500*20%=500, and 2500*0.05=125). [20% allocated, and risking 5%] Of course, not everyone is same, so do your Due diligent, and be consistent.
How did you start with this 0 DTE strategy?
I learned options when I was at school. I started with buying options. Then I learned that I can be a seller in the options market, Like being a Casino instead of being a gambler. Then I learned high probability trade like selling OTM options with long DTE, it was not for me personally. It did not fit my personality, I would love to do short term trade. Then this strategy fits my goal and objectives, and I have been trading this strategy ever since.
How long have you been doing this 0 DTE strategy?
I really can't remember, however I have been more focused on since November 2019. This is when I created this platform.