0DTE Options Strategy Guide
What is 0DTE Options?
0DTE refers to Zero Days to Expiration: the last day of expiration of an options contract. Selling and buying options at zero days to expiration offers uniquely attractive trading opportunities.
Most Stocks, ETFs, indexes, and futures contracts are optionable (have options), and all options contracts have an expiration. The premium, or value of an option, decays exponentially over time until it is completely gone at the time of expiration.
We trade options on the 0DTE — the expiration date — in order to collect or profit from this rapidly decaying premium. And we do this with an asymmetric strategy that provides small risk with large potential returns.
What is an Asymmetric Strategy?
An asymmetric strategy is one where the risk you take in a trade is very different compared to the potential profit you can earn. We call this the risk to reward ratio.
Most options strategies are asymmetric in a difficult to manage direction, where the risk is larger than the reward. That simply isn’t a good approach to risk management.
Our strategy takes these negative ratios and inverts them so that the reward is much larger than the risk. This makes all the difference in the world to the trader by increasing the chances for a positive outcome, reducing their anxiety and elevating their level of confidence with superior performance.
Why options, why 0DTE?
Options are complex ways to trade assets, but they are also extremely powerful. The principal reason we trade them is that they let us define our risk and model our potential profit.
The other reason we trade 0DTE options is the incredible versatility our strategy has in varying market conditions.
The last day of expiration is a special case that presents a significant edge, allowing us to take a small risk for potentially large profits while spending a very short time in the market.
While you could trade 0 DTE options with any asset type, we choose options on the S&P 500 for some very specific reasons that give us an incredible edge.
The General Premise of 0DTE
Trading on the last day of expiration allows us to take advantage of the exponential decay of premium. As time moves forward toward the expiration of the options contract, our ability to take in premium/profit increases…dramatically. A HUGE edge!
Options on S&P Futures have five expirations every day of the week: Monday through Friday. That’s five opportunities every week to take advantage of this edge. Most options only have one opportunity per week.
The strategy is to open a position (trade) before expiration, hold it until you’ve collected the desired premium (assuming the price is within the profit zone of your strategy), then exit the position, or allow it to expire to collect the maximum amount of profit.
Options Premium Collection Strategies
We use premium collection strategies, which are multi-leg strategies.
In other words, the strategy is made up of two or more options contracts, some of which are short and used to collect the premium. The long contracts are used to cap your risk.
The types of strategies most often used to collect options premium include naked short puts or calls, vertical spreads, short straddles or strangles, iron condors, and butterflies. Our preferred strategy is the butterfly.
Each strategy has its place given your tolerance and capacity for risk and market conditions. The selection of the specific strategy, also the timing and strike placement, is determined by analysis. This analysis can be quantitative, technical, systematic, or discretionary.
Most Popular 0DTE Strategies
What I am about to describe are the two most popular strategies. They are by no means the best. In our opinion, and based on our analysis and actual performance, we can say unequivocally they are among the worst possible strategies.
The most popular strategies utilize high probability (low delta) 0 DTE credit spreads and iron condors. These are generally rules-based, or systematic strategies, with stop losses to protect against catastrophic losses.
The second-most popular strategy is the iron butterfly or just a butterfly, which takes a market neutral position, with the short strikes placed at the money (ATM). This also includes stop losses to prevent catastrophic losses.
Why are these strategies flawed?
The high probability strategy is flawed for a number of reasons.
First, as soon as you get into a trade, the price generally moves in the S&P, and so you are underwater, in a negative, losing position.
If price threatens one of your long strikes, you risk max loss, which is far greater than your max profit, typically 10-20 times greater. This forces you to invoke a stop loss and lose money, making it essentially a low probability trade with low profit and high risk.
The Iron Butterfly suffers from the exact same problem. It is marginally better because the premium collection is faster due to the concentrated short strikes, which allows you to spend less time in the trade. However, it ultimately results in the same dilemma, should the price move up or down.
Both strategies work best when volatility is dropping and the price does not move. This is a painfully rare condition in the market for people using these popular strategies.
How is 0-dte.com Different?
We use an Inversion of Risk strategy. That means the asymmetric risk is in our favor, not against like the other strategies. We don’t utilize stops because they’re not needed in our strategy. Risk is managed through the benefit of low cost of the strategy. This way we spend our efforts managing profits, not managing risk.
Our win rate is higher and our return on capital is an order of magnitude higher. That means you never sweat a trade, there’s zero anxiety. And probably most significantly, you get world-class support and coaching…the other services offer nothing close.
Hear from 0-dte.com members about their positive experiences learning and growing as traders in our program.
Attitude is Everything
We trade our 0DTE strategy because it promotes zero anxiety and high confidence in traders who follow it. There is nothing more important to a trader’s mental state than their ability to maintain discipline.
The service is focused on coaching and mentoring so that each and every member is given the attention they need to become successful. We know you’re here to learn the strategy and the mindset, so that’s what we enable.
Our alerts are a demonstration of the strategy, not the central feature of the service, even though our alerts provide far greater and more consistent profit opportunities than the other services.
4 Step Process (Hi-Level)
- Global macro and micro analysis to develop a definitive bias for the session, both in direction and magnitude.
- Develop the market structure with Volume Profile and other statistical tools. Combined with step 1, this produces multiple ranked scenarios on the expected price behavior.
- Fashion asymmetric options models that address the highest-ranked scenarios with a premium collection strategy.
- Management of profit through the exit of the strategy prior to the end of session.
- Win Rate: 50-85%, varies by volatility regime
- Returns: Avg > 150% of risk taken
- Risk per trade: $50-$150
- Break down of returns:
- 65% of returns are 75-200% of risk capital
- 25% of returns are 200-500% of risk capital
- 10% of returns are > 500% of risk capital, max return was 1500%
- Breakdown of losses, 15-20% of trades result in a loss • 50% result in max loss • 50% result in break even to 50% of max loss.
All trades are posted in Discord, prior to the admin taking a position in the reference account.
After the position is entered, a screenshot of the admin’s trading account is posted in Discord.
After it is filled, screenshots are posted, showing the fill event and the current P&L.
All support is provided by Ernie Varitimos.
You can reach him in real-time or by sending a message. You will receive an answer as soon as he can get back to you. That usually means right away, and hardly ever more than 12 hours.
If he doesn’t reply, send him a text message on his mobile and mention your name and membership.
- On Discord he is @traderoffutures
- Email: firstname.lastname@example.org
- Mobile: 508-446-0517
Mentoring and Coaching
Every person is entitled to personalized attention. If the question or need is general in nature, it’s preferable to do it on one of our Discord channels.
But if you want a Zoom session or live stream on Discord, no problem, just ask. At the end of each week, we host a webinar on Sunday at 1 p.m. Eastern. Every member is invited.
At the end of each month, we conduct a Retrospective of the previous month’s trades and execution of our trading 0 DTE options campaign plan. This is held via live stream, on the last Sunday of the month at 1 p.m. Eastern time. you will be notified in advance by email and an @everyone announcement in the Discord.
The members’ website is 0-dte.com. All members can manage their membership there.
Webinars, podcasts, and Saturday meetings are archived there. Courses covering the strategy and methods are available there.
You can visit our contact and FAQ page to learn more about our service and reach out for more information prior to becoming a member.
Ready to take advantage of asymmetric risk and dive into the world of 0DTE option trading? Our four-week paid trial gives you full access to all of the resources, support, and information we offer! Check out all of our membership options and join the 0-dte.com community.