Hey friends. This is Ernie and this is the 41st episode of the zero dash DTE podcast. Also livestreamed on YouTube. So every Monday, Wednesday, and Friday, unless there's a holiday, you can expect me to be here and talking to you about these zero DTE days. And what is there a DTE?
It is the zero or zero. th..., is that a word zero th? A zero th day of expiration, four options on the S&P. Or both the futures and the SPX or the SPX index. And that's what we do. We trade options on the S&P on that last day of expiration. Now why the last day? Why? There's there's that question?
Why, again, it's always about the, why isn't it. And I say, no, it's not about the why it's about the, what. We trade the very last day of expiration because it gives us an incredible edge and that edge is the exponential decay of premium. On the last day of expiration of any options. Contract premium is decaying at its most rapid possible rate on that last day.
And so what does that mean to someone like myself who likes to sell premium or be a net seller of options? Okay. Well, that means that because I am selling and I am taking on the obligation of being the writer or seller of an option. I get rewarded by taking in the premium and as premium decays, that decay goes right into my account.
And that is nice. That's part of the edge. And just that alone as being a net seller of premium, you have a huge edge over most options traders, but there is much, much more to it than that as a general rule, premium is overstated or the volatility is overstated and that's volatility is primarily what makes up premium it's overstated and it's like selling stuff.
That is always overpriced. And then people beating down your door to buy your overpriced stuff. That's a wonderful thing. That is a wonderful thing. Especially in this market. There's always. Uh, you know, just a huge crowd of people just wanting to beat down and buy my overpriced stuff. Well, it's not my overprice stuff.
It's what I'm taking control of at that particular time. So that's the other edge that we get other, and we have many, many other edges that I've talked about in other podcasts, go back and check them out. And we just stack them on top of each other to create a strategy that is without.
I would say the premier way today, trade in these markets. I don't know of any other day trading strategy, other than being a market maker and getting that guaranteed profit from the arbitrage you get from the difference between the ask and the bid. Other than that, this is I believe the only way that you can consistently make money.
Now, I don't want that consistent word to be. Mixed up with the idea of producing an income. This is not about producing an income, producing an income would, would necessarily assume that the market is this sort of steady as she goes type of thing. And you just have to step into gear with it and then pull out, you know, your regular check ever every second day or Monday, Wednesday, or Friday.
And that's not the case at all. This is a growth strategy because that's what the market provides us in terms of opportunities. Most of the time, those opportunities are relatively benign or slim and we can make darn good profit off of those benign days. Like today. And then every once in a while, between 30%, sometimes as little as 10% of the time, we get gifts, gifts from the market that totally explode our profit making potential.