Zero Days To Expiration

When a market has no real direction, when it reverses on no apparent news, when economic reports are mixed and news seems more like propaganda than substance.

What do you do as a 0-DTE trader? You have 3 shots at profit a week, no clear signals, the start of a down trend after a multiyear uptrend. No one knows what to think or how to act. Yet somehow you are expected to perform. What would you do?

In order to create an asymmetrical trade, that has small risk and relatively large potential profit, you must place a traditionally neutral options strategy out of the money (OTM). This means that your options strategy is in effect a directional strategy now. And it also means you need to have a better than 50/50 chance of picking the direction the market is going, then place your strategy in the path of the market. Most traders will resort to Technical Analysis (TA), however it is ineffective.

There are much better ways that don't resort to numerology and pseudo science. That is the purpose of this episode, to describe how we do that for 0-DTE trades.

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When you take risks does it have to be all or nothing? Ideally you would like your risks to be small, and the rewards to be big, and if possible a back door, so that you can turn things around that appear to be going sour. That is optionality, choices, multiple good or better or not so bad outcomes.

We discuss these concepts and how our 0-DTE strategy embraces them.

The first truth about trading that you must come to grips with is that it is not an income producing endeavor. The markets are not your compliant little piggy bank waiting for you to make a withdrawal. The market is not your friend, it is your adversary in every way. It will make you rich or wipe you out without so much as a flicker of care.

So, how do you plan to grow your account in a hostile environment like the markets? You take what you can, and develop a strategy for growth...and that is todays topic.

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In virtually every trading strategy out there for the retail trader, it is drilled into us that we must learn to manage our risks. That success only comes to the trader who can successfully and consistently manage their risks.

And these risks come in so many forms, from strategy, to market surprises, to psychology. Well, with our 0-DTE strategy risk is not an issue at all, instead we are presented with a much higher quality problem, how to manage our profits. So, in this episode we will examine just that.

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In our previous episode I talked about the affect the volatility had on our 0-DTE strategy. Today we have a potentially large source of volatility, the release of FOMC minutes, which provides insight as to how the Fed is planning to steer our economy for the next several weeks and into the future. This can be really good, or really bad, but sometimes it can also be a big nothing burger...like today.

On Friday however, we have Chairman Jerome Powell speaking, and he will lay out the case to taper QE or not to taper QE and what the market should expect. Now this will be fun, and likely to contain some real zingers. Check out this episode to find out how we plan to capitalize on that event with our 0-DTE strategy.

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0 DTE 4-week Trial

https://0-dte.com/try

Subscribe to the 0-DTE Podcast

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Join Our Discord Server

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