Tasty Trade Zeros In on SPX Zero DTEs

In this episode of TP and DLD, hosts TP and Liz discuss the growing popularity of zero-day-to-expiration (zero DTE) SPX options trading. They analyze the cash settlement advantage of SPX options versus SPY options and share trading strategies for both experienced and novice traders.

The hosts examine market liquidity in SPX options, noting the exceptionally high volume compared to open interest in zero DTEs - indicating same-day trading activity. They discuss iron condor strategies, risk management through butterfly conversions, and how these strategies can work in smaller accounts without triggering pattern day trading rules.

TP advocates for three market structure improvements: cash settlement for all options, penny ticks for all options including futures, and standardized 100 multipliers for all contracts.

For beginners, the hosts recommend starting with defined-risk trades like put spreads in liquid instruments, contrasting with the conventional wisdom of beginning with covered calls or long options.