Strategies for Trading 0-DTE
By Ernie Varitimos
February 5, 2022
0:00 / 32:27
Strategies for Trading 0-DTE

Yes, we are alive. Anyone friends Ernie here, and this is the zero days to expiration podcast. And we're up to episode number 74. We had a little lag there, once we hit about 65 or so. And, um, we were doing about three times a week and then, the new year's came vacation time came and things slowed down.

I got lazy, but now we're back to three days a week, every Monday, Wednesday, and Friday reporting on. The last day of expiration trading for that week, for that day. And today was a good one. Today was a very good day. We actually had two trades. Well actually officially just one trade. We were, fancying around with another strategy and that worked out and I don't believe everybody took that, but Our second trade is certainly a winner is matter of fact, we are currently at a, what we would call in position for a pin, very rarely does that happen.

A pin trade is where you set a target. And you hit it, you pin it, pin the tail on the donkey. So, there's still a question on whether or not that will hold right through the day. Although it's been sitting here for quite some time so long that I actually dozed off. So that's why I'm a little bit late here to the podcast.

So today I wanted to talk about. The different types of strategies that we employ. And maybe I'll start with just what we do here and what we did today.

So 0-DTE first of all, what is 0-DTE? 0-DTE is the last day of expiration, of course, talking about trading options on the S and P. Now there are three different ways that you can trade options on the S and P there's the spot. There's the futures, the ESD mini, and then there's the index, the SPX, they all have their pluses and minuses.

We like the futures for the ability to trade around the clock and the SPX for its size and liquidity, the spy. It doesn't probably don't trade that as much. It's a smaller contract. So it's not too bad, but has its issues.

Now the S and P along with, the NASDAQ, one of the few indexes that are out there that has multiple days for expiration within a week, most options. All our options have monthly expirations. And as of about 10, about 12 or 13 years ago, or 14, maybe 14, 15 years ago, we started with weekly options where options would expire on.

Of each week. I remember apple was one of the very first, a weekly options assets. And that was good because now you can employ a lot of the same kind of strategies that you have a monthly, but now you had four opportunities a week, the S and P and the NASDAQ now have three per week. Monday Wednesday and Friday.

And in fact, the SPX just recently, I believe the CBOE has okayed five option expirations per week. So every single day, the SPX you'll be able to have a separate contract that expires every day of the week. Now it's not clear whether. All brokers are going to pick that up if it's going to, if you'll actually be able to do it.

So for instance, the SPX also, was cleared for doing trading around the clock, there are some most, trading platforms still only allow you to access it during normal cash market hours. If it went around the clock, then there would be. A very good reason to just trade the SPX over the futures.