Something from Nothing
By Ernie Varitimos
November 18, 2021
0:00 / 22:20
Something from Nothing

Okay. 3, 2, 1 we're live eight brands like you doing or any here. And this is the zero dash D T E podcast. Episode number 57, 57 episodes. Doing about three a week casually two a week. Depends on what happens, but I try to do three a week for every single zero DTE opportunity there is. And today is one of those opportunities.

Today is Wednesday. We have three opportunities every week, Monday, Wednesday, Friday, where options on the S and P you gotta turn this off here. Options on the SMP. There we go. Whether it's the E-mini futures contract or the SPX index, they expire three times a week. What is this? What is this? You say? It's incredible.

I thought weekly options expired once a week and then monthly once a month. That is. However, these are special options that expire three times a week because they're there to serve us. And one of the great things about trading options, one of the things, depending on what side of the fence that you lie or stand, and that is options, expiration and premium decay.

Most people that are trading options are trading them long and they fear, they literally fear premium decay because it is constantly something that they have to fight against. The premium is decaying. The long option is getting weaker and weaker, and they're hoping that it will go in the right direction and it has to outrun the premium decay.

That is what most people would. And consequently, most people are not taking advantage of that opposite side of the coin, the edge, and they're losing money. The sellers of options. On the other hand, have the other side of the coin or what you would say the reverse as opposed to the averse little numismatic lingo there.

And they are selling that premium. So that premium, that is decaying or going away from the long option holders. Where do you think it goes? It just doesn't go into the big bucket. No, it's going into someone else who is selling that same option and that's what we do. We sell options premium on that last day of expiration.

Three times a week, because there is an incredible edge because option premium is decaying at an ever exponential rate faster and faster until you get to the end of the day where it's all gone. Or in other words, it's all in our pocket. If we're selling it, that's a wonderful thing. Now we get three chances to do this every week.

Now we have a particular set of strategies. Designed to maximize our ability to collect that premium and the number one strategy that we use, or the family of strategies, because there's more than just one basic of this type is the butterfly. Now the butterfly, as most people know it, that are in the long side of the world, they think that the butterfly is a market neutral.

How often do you find that the market is neutral? Not very often today might be one of those days where the market is worth more or less going sideways. And one might argue that the market is neutral today, or is it sure it's going sideways? Had you placed your butterfly at the open today? You probably would have stopped out sometime during the day, based on most people's idea of an option of a butterfly strategy where they place their trade at the money.

Right on the center strikes on a symmetrical butterfly. It's like a triangle, right?