[00:00] Hey traders, TJ Watkins here. This is going to be the beginning of a minieries on how I trade zerodt options on the S&P. So, this is something that I taught and I thought, you know what, until the small caps really get going and this
[00:15] market gets going, I got to learn something else. And S&P was all the how to day trade and how to look at the market the way that I need to look at it. And I just thought, well, let me see if I could figure out this zero DT thing
[00:29] even I came across that I didn't know uh that was possible. And that is really So, let me dive into this. It's going to be a few minutes of a of a nice
[00:42] look for more coming out after this. [Music]
[00:57] Thinkorswim, I don't know about some of the other programs, but there's a thing called on demand. It's basically a DVR for the stock market. It's really, really incredible. It's very powerful. It's great for even just stock trading
[01:11] because you can go back, you can learn, and you can study historical moves more it's too easy. you look at and be like, "Oh, yeah, that's obvious." But when you then you can actually train and practice that way. And looking at some of this
[01:29] time, you can actually just go back a few days and um, you know, press fast you can go like two or 3x the speed and actually watch it that way. So that's
[01:43] how I train myself. That's how I learned. And uh I think that if your software other than thinkerw swim has that capability really use it. All right. So zerodt this is zero days to expiration. That's what that stands for.
[01:57] platforms but this is the biggest thing that I learned. This is really the number one thing. I didn't know that you could actually plot options on a chart
[02:10] just like stock. I thought you always had to look at a an option table, but what I found is that, and again, maybe you guys know this, maybe this is silly that I didn't, maybe it's oh so obvious, but I think still a lot of people did
[02:25] even know this, and I'm in the industry. But you can rightclick uh on these or at least get the the information for what contract you're looking at, and you can
[02:37] go put this up in the ticker bar, and you can just press enter. And now you can look at options and the price of options the same way that you look at stocks. It blew my mind when I found out about that because I'm pretty good at
[02:51] look at options the same way that you look at stocks. And uh it just really opened up a whole whole new world for me to be able to see this visually. So this
[03:04] let me show you a little bit more about all of these things as we get going. All right. So, what are zero DTE options? Well, it used to be that they had
[03:16] monthly options, only monthly options. So, once a month there was, you know, opex options expir day. So, once a month there became zero DTE actually those were the original zero day to expiration because these monthly options that had
[03:30] 30 days on them, you come to the end of the month and on a Friday, this is the last day and that's where people would actually start using these. In fact, even the last week when there are only 5 days left on these things, uh traders
[03:42] would specifically look for the end of the month and for the last day for some of these moves to get really crazy because when there's when there's basically no time left on these, uh if you are going to get a move that goes
[03:55] into the money, these things go from being basically worth almost nothing to being worth a whole lot. It was it's pretty wild. And you could also do the other way around that if you're looking to capture money by selling it, then you
[04:08] want these things to decay. And the the faster they the the more they get to the expiration, the more that the value actually falls off. So the soon the the closer that it gets to expiration, the faster that the value drops off. So if
[04:23] well, there can be some really crazy opportunities for you as well. And the the market makers, you know, CBOE and all these other people that made these things, they started tinkering out around with weekly
[04:38] weekly options. And they're like, "Okay, well, this is going pretty well. People are pretty interested in weekly options." So then they made them uh they now then they even made more that would expire halfway through. They made
[04:53] Wednesday options. And so they're like, "Okay, well this seems to be going well. took it one step further and they said, "How about we make options that expire
[05:05] every single day, zero DTE?" Now, that doesn't mean that they created options that are created this day and expire this day. That's not what they did. What they did is they went out in the future and they just made an option series for
[05:18] every single day into the future. And that means every single day there happens to be an option series that is expiring. So that's what I'm showing you there is at least one option series that expires every day. Used to happen every
[05:34] month, now it happens every day. And so this is good because if you are trying to sell options, meaning you want your your premium to go to zero because you're selling it, these will lose value quickly because they expire that day. Or
[05:47] if you and this is like selling credit, so selling credit there. Or they can get this is buying premium. So if you look at the option table here, you can see
[05:59] zero. There's your zero DT, zero days to expiration. There are no more days left. It expires today. And you can see, okay, there's one day left to expiration, two basically, you can just see that there is an option series for every day of the
[06:14] trading week. And so you could, you know, this one at that's 19 days out, eventually it will become a zero DTE just because it will eventually expire that works. All right, when to trade zero DTE. So for me, I really like the
[06:32] market settle for the first 15 minutes. Now, of course, sometimes the market course, but for the most part, uh, the first move of the market, you know, you
[06:44] get orders that are left over from the night before. You get, uh, bots that are coming in that need to buy some things and fill orders from the night before, chaotic and may not really be the the real move. And so, give it 15 minutes.
[07:01] in. Let all the uh the internals, the gauges, the indicators, let them kind of get warmed up and start getting data for the day. So that's where I say just give
[07:13] it 15 minutes, let it go. Um if you are going to be selling credit, uh selling premiums, I like to at least sell in the first half of the day. That's because the premiums are fatter. Remember, each day you're going to start out with that
[07:28] much premium, whether it's a call or a put. And as the day goes on, they're Like if they are not going to end up end in the money, they have to expire and
[07:40] they have to go to zero. So you are constantly working against this decay which is theta decay. It eventually goes to zero. So if you start trading in the if you start selling premium in the morning that's good because you've got a
[07:53] lot of premium to work for until it goes to zero. If you are trading say later in the day you know you've already had a lot of theta decay and zero is down here in order to cash in. Now yes there are yes you can still make some or if the
[08:11] around all over the place like this. Well, if the market moved up like this and then it starts to turn back down, you could sell a call credit spread up here selling calls because those calls gained in value even at the end of the
[08:28] day because the market was going up and then as it starts to come back down towards the end of the day, these suddenly become worthless. They went from being worth something to now suddenly starting to become nothing
[08:41] because the price of the market is starting to move away from them away worthless and so that if you find an opportunity then you can find where they
[08:54] this is where I was saying here or at the turn of a move so you know uh if it comes up like this and then starts to go down you can sell here because the price
[09:06] of the SP PX moved away from the calls and those will become worth less as price moves away from it. So that's another way to do it. Uh selling at the end of the day can be risky though. Like if you're just selling to sell because
[09:19] against you then your calls that you were selling the ones that were had very little uh value to expire they suddenly become worth a lot and that's going to
[09:32] to understand. Now, if you're going to be buying premium, you want to buy a long call, you want to buy a long put, you can do that at any point throughout
[09:44] the day because if the market's going to move, these things will appreciate. And there's very little premium left on these things at the end of the day. And if the market happens to move into that strike, they go from being worth almost
[09:59] nothing to suddenly being worth quite a bit because price suddenly moved into know that if there is a setup to go long on a call or a put, it can happen at any
[10:12] moving. All right, some things to know about basically options and zerodt be a good thing, it can be a bad thing. It depends on your strategy and what
[10:27] side of the market you're trying to be on. It means that they lose value every minute if the stock price is not overcoming that theta decay. So, if call, you need the price of the S&P to move in order to overcome that theta
[10:43] decay and really make the prices of the option appreciate and become valuable. Okay. uh picking a strike too far out will require a big move from the market in order to gain value. So, you know, if you have the S&P 500X here, let's just
[10:57] say it's at 5,900 and for today, you are buying, let's say, a 6,000 call, it is unlikely. Now, granted, we've seen a lot of S&P is going to go from here to here in one day. And so, picking that strike,
[11:15] moves up a little bit because it just it's not going to reach there. So, maybe like 5920. That might be a little bit more
[11:30] reasonable because if the market does move up either it can move to 5920, maybe it can actually move beyond 5920 and now it's in the money and it becomes worth more things to know. And let's see using options using
[11:44] the option chart the thing I kind of alluded to earlier not just the option table can really help you visualize how much options change in price. This was the thing that totally knocked my socks off and was incredible. I did not know
[11:57] this until I finally did and I was like, where has this been and why has nobody Uh, going back to how to pick the S&P strike. Uh, typically selected based on
[12:09] Delta, Vega, Vanna, gamas, all that kind of stuff. I don't look at any of those. But really, for me, I look at price. Now, this strategy is to try and catch
[12:24] the bigger moves. All right? If you want to just catch little moves, you're going to have to be a little bit closer to in the money or at the money for your strikes. But if you're going to go out of the money and if the market's going
[12:36] to move big, then you're going to want to look at buying a call or a put that is between$1 and $5. Probably between $3 and $5 is better because it means you're direction, these things will actually start working for you. If you're too
[12:53] cheap, the markets are telling you that the strike is very unlikely to work. Uh too expensive, the more it will move just like the S&P, which is great, but it won't have the potential for exponential growth because if you're too
[13:07] well, you're already in the money. It's going to be basically linear. It's going to appreciate. that's great, but it's not going to have this exponential growth because when you are out of the money and the S&P starts to actually
[13:22] climb through a lot of these strikes, the thing that was out of the money starts to become in the money and there are it's like stairstepping. It becomes exponential as far as how these things grow because something that wasn't
[13:35] expected to be in the money is now actually there and uh it can grow. So again, I'll show you all this right here what this looks like. So, here is uh back from 2024. It's a 522 call. And this is what I use on a
[13:51] two-minute chart. Again, all of this is going to be in the class that I teach. I teaching you guys how to do this. But think about the principle of what's happening. Whether you were buying a call or buying a put, you want it to go
[14:08] up in value. Okay? That now if you're buying a put, you want the market to go down. That's how the put becomes valuable. If you're buying a call, you want the market to go up. That's how the call becomes valuable. But regardless,
[14:21] go up in value, which means this is like the secret. This is what it means is you want you're always looking for an uptrend. Even if you're buying a put,
[14:33] you want your put to go up in value. So, you are trying to trade an uptrending value. And that's where if you look at options like this, this is a 5 522 5220
[14:45] call and this is the price of that call. It looks just like a stock chart. And so if you know how to trade stocks, you can then trade options based on a visual way instead of all these deltas, gamas, and the option tables. This is a nice visual
[15:00] representation. And you can see here this is when it started to go bullish and this was the continuation. And you can see just how the option went up in price. So just like imagine this was a stock. If this were a stock, you
[15:13] wouldn't want to be buying the stock as it's going down. No, you want to know when the stock actually turns direction and you can actually start buying it as it starts to hold these moving averages. Fast moving average over the slow moving
[15:26] average starting to engage with uptrending moving averages. All the things you would want to do to buy an uptrending stock is the same thing that you would want to do to buy an uptrending option. Again, regardless if
[15:39] it's a call or a put. So, let me keep showing you some more examples. Basically, what I just said is all right here. Everything I just said is now in that I just showed you. Just a word. And this is everything that I teach for the
[15:56] Moxy subscribers. Anybody who takes any of my classes and wants to learn how to stock trade, it's the same thing about options trading because you're trying to go up in value and using the same Moxy principles, same things I teach for
[16:09] necessarily run through this. You guys can look at this. This is the answer to everything we need in order to know how to go long calls or puts. So, then how
[16:21] about this? Here is a 5220 put. And if you want to go long a put, you want that put to go up in value. Yes, the market's going down, but you want your your
[16:34] option to go up in value. And therefore, you're going to do the same thing that want the fast moving average or the slow moving average. You want the Moxy price
[16:46] want to see price continuing to follow the moving averages to the upside. Now, day. You're day trading. Doesn't mean you buy and hold for the day. You can
[17:00] get in, you can get out. Hey, I've had trades that I've made uh 100 or few hundred% or whatever in 20 minutes, 30 minutes, 60 minutes. Okay, it's great, but you need to know when to get out. And you can see here, this is the turn.
[17:13] going down? Notice how the moving averages have changed direction. And notice how it is no longer holding the uptrending moving average on a bigger downtrend. So you can trade these options. You can day trade zerodt
[17:31] options in both directions. You can buy this put to make it go up in value. You can sell this put selling credit if you want it to to go down in value. You can
[17:43] do both sides. And this was really the light bulb that just absolutely went off and triggered in my head about how to see options in a completely different way. Revolutionized my trading. And so if this really resonates with you, if
[17:58] you this before, and this is also blowing your mind as to far as far as being able to see options as instead of just seeing numbers on a on an option
[18:12] table, then you guys need to make sure that you look at this and come over to come over and actually see what I have for sale over here on these classes
[18:24] just put these in the store and uh you guys want to know about these things. the S&P breakout session. Uh later on, as I put more of these videos out, I'll
[18:38] talk more about the ETF breakout session. Uh we are running a package if know it's the S&P breakout session. It's how you learn how to how to trade zerodt options on the S&P using the methodology methodology that I just told you about.
[18:54] And so what you guys are want to go go to, we have the link in the description, simplertrading.com/courses/moxy sessions. And before I wrap up here, let's go back one. And some things that you guys want to know, we'll be covering
[19:08] this in the next video is going to be how to buy long calls, long puts, how to showed you today, how to set up a credit spread, because that's the other thing
[19:20] that I figured out with these zero DTS. You don't always have to buy, you can sell. And that's also pretty fun, too, because most of these options, like 80% to your advantage. And then how to have risk management when it comes to zero
[19:35] DT. So, I got some rules and some things about that that actually helps you kind zero DT is kind of like the wild west and super crazy and all that kind of just like any other trading. You just have your your stop losses, your
[19:51] shorter time frame. And then you just size appropriately and then common stuff that you want to come in and check out and make sure that you understand
[20:03] how to do these things. Okay, so just one last time, remember, come over to you guys are going to be looking for. If you have any questions, email us or call
[20:15] things and they'll help get you in the right package. Okay guys, well thanks again and we'll see you at the next video series. Hey TG here with Simpler like or comment below. Also, make sure to subscribe and click that notification
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