Welcome to the zero dash DTE podcast at zero days to expiration the zero dash that's referring to the firstname.lastname@example.org. And if you want to find us on YouTube, it's just zero days to expert. What we're all about is discussing and exploring and talking about and showing how a, an option strategy with the SPX.
That's the SPX index using asymmetry asymmetric outcomes can be the best possible trading strategy that's out there, whether it's day trading or swing trading. I don't really know. When we talk about day trading or swing trading, really the difference is time. And the more time that you have in front of you in order to expect a particular outcome, the greater, the odds are that you're going to fail, or that there's something going to happen that you don't expect to happen.
If you can reduce that time down to a very small well-defined manageable. Range of time. You have a much better chance of figuring out well where price is going to go. I think that goes without saying, and that's actually expressed in the pricing of options to the furthest. Something is out in time, the greater, the volatility, the higher price that is because you're taking a much larger chance.
Now, if you could compress all of that, And get the same kind of inflated premium that you would get from looking at something that's far out to something that is very close and then put the odds in your favor. You would really have something now in terms of asymmetry, there are two different ways that most people trade, they trade either with a high probability trade thinking.
Okay. I'm going to create income for myself. I'm going to trade so that I have a really high probability of making a tiny little bit of money with each individual trade. And then the chance of up or hitting the risk is really small. And if that risk does come along, I'm going to find a way to.
Of course, that what happens is that you hit that risk way off more, a way often, way more often, I should say, than you ever intended. And the risk is usually way bigger than you thought. And the result is that most people that are choosing these high probability quote income trades end up being losers.
So the flip side of that is to take very tiny risks for very large. With that. Yeah, it may seem like the reward is way out there. Something that maybe unattainable, but the risk that you're taking is very small. So it never really hurts. So there's really no management of your position. There's no anxiety that you experience like you do with low probability trades.
And when you do hit that jackpot or you do. The winner then your outcome is just tremendous and you can in your head. And if you took this to an extreme, let's say that your odds were one in 10,000 to win $10,000. Okay. And then every time that you took a chance, it costs you a dollar.
If you took that to its logical extreme, then at the end of. Let's say you hit one out of 10,000, but you did it on that very last try. You would be out a thousand bucks or $999. But if you flip that and let's say that the odds of winning were 999 out of a thousand to win $1, then you're going to consistently win that $1.
And you think that you're fine, but if you lose $10,000. Now the odds are one thing, but the reality is that if you were to look at these two scenarios, the odds of you not hitting the worst possible scenario or the best possible scenario at your last chance are very small. It's going to happen somewhere in the middle.