Traders discussed positioning strategies amid a strong market rally fueled by favorable trade news. Volatility contracted significantly with VIX futures down to 22, creating profitable conditions for long/short volatility strategies. Key trade ideas included an Expedia (EXPE) diagonal call spread targeting high implied volatility, an AMD ratio put spread providing neutral-to-bearish exposure, and an EEM emerging markets zebra trade offering short delta exposure while the ETF trades near recent range highs. The session highlighted capital efficiency through options strategies versus outright stock positions, with emphasis on proper position sizing and risk management. Liquidity considerations were stressed for futures options trading, with crude oil, gold and E-mini S&P contracts recommended as having the tightest markets.

Traders discussed positioning strategies amid a strong market rally fueled by favorable trade news. Volatility contracted significantly with VIX futures down to 22, creating profitable conditions for long/short volatility strategies. Key trade ideas included an Expedia (EXPE) diagonal call spread targeting high implied volatility, an AMD ratio put spread providing neutral-to-bearish exposure, and an EEM emerging markets zebra trade offering short delta exposure while the ETF trades near recent range highs. The session highlighted capital efficiency through options strategies versus outright stock positions, with emphasis on proper position sizing and risk management. Liquidity considerations were stressed for futures options trading, with crude oil, gold and E-mini S&P contracts recommended as having the tightest markets.

Tom and Tony examine the optimal timing for zero days-to-expiration (0DTE) option trades focusing on iron butterflies and iron condors. The data from two years of trading showed that the 9:00-9:30 AM CST time slot had the best performance and delivered 60% probability of profit with $6 average P&L on $30-wide iron flies.

Research also revealed avoiding the market opening improves results, as volatility typically contracts throughout the day. Afternoon trading showed larger potential profits but carried nearly 100 gammas making it very risky.

This market measure showed that the ability to quickly open and close trades is the principal advantage of the extreme liquidity in 0 DTE markets and that it payed to finish your coffee and wait at least 30 minutes before selling premium.