[00:07] July 11th around uh 2:30 or so. And today we're going to talk about why the E- mini futures is the preferred way
[00:19] the E- mini futures is the preferred way to trade the zero DTE. Now I know that most people will trade zero DTE with the S&P and there's a good reason why they they do that and uh that is because they
[00:33] choose to trade a certain strategy where it is such a poor strategy has where it is such a poor strategy has such um from a risk-to-reward point of view they have such slim margins the amount of money that they can make that
[00:48] they have to choose the cheapest possible options contract. its size or anything like that, but in terms of commissions. They don't care commissions because if they don't, then it will eat
[01:03] into their potential profits. That's really the reason why they do it regardless of the fact that the S&P is an inferior an inferior um asset to with zero DTE.
[01:16] So, that's why they do it. But why would you use the E- mini futures contract? The E- mini S&P 500 futures contract. First of all, what is a futures contract? A lot of people are kind of they have this
[01:32] weird idea that it's something like an options contract because it has an expiration. That's about the only thing that it has Well, there are two things. One is that it is a contract between a buyer and a
[01:46] seller. And the other is that it has an expiration in a period of effectivity. Right? So it is a contract just like any other contract that you can purchase or negotiate in the world or the United States or
[02:01] from. But the big difference is that there is no time premium associated with a futures contract. A fuchious contract was designed for a very very specific purpose and that is to help um protect
[02:20] price stability of buyers and sellers of various commodities. Now when you think of commodities they can be a wide range of things. It could be it could be lumber, it could be um a precious metal. It it could be hogs. It
[02:36] could be grain. It could even be an index or an equity position. So all of these things are commodities. They even have, believe it or not, they have weather uh futures contracts. But the purpose of a commodity or a
[02:51] futures contract is to help both the buyer and seller, the two different parties that are involved in the cash market of that particular commodity maintain price stability. So to give you an idea, well in at its
[03:08] very essence, it is to keep the price that you have right now the same as the price when you want to get delivered the commodity. And that's the other thing that a futures contract does. You purchase a futures contract. Now, let me
[03:24] let me be clear here. This this is probably a foreign concept to most people that have ever traded futures. That's because you guys out futures. That's because you guys out there are not the original were not the
[03:38] original intent for futures contracts. They were originally meant for people who are in the cash market for that particular commodity so that they could transact back and forth and take delivery at specified prices at
[03:52] specified dates and they would keep th those prices in check. So, if you were a buyer of a futures contract, you were somebody that was trying to protect somebody that was trying to protect against uh an overpric commodity. If you
[04:05] were a seller or a producer of that commodity, you would sell futures contracts to protect against a market where the thing that you're trying to sell to a buyer happens to degrade in price. So, you are a a true hedger. That
[04:21] is what a hedger actually is. they are somebody who is involved in the actual somebody who is involved in the actual cash market of the underlying commodity and it even works with things like um
[04:34] equity positions too. So it's different but it's similar. You on the other hand are not a hedger. You are not involved in the cash market. You never take or will ever take delivery of gold or oil or anything else
[04:48] that's on the other side of that contract. You have absolutely no intent. You are strictly a speculator. So what is your purpose then contracts? Well, you have a very very specific purpose. Without the
[05:03] speculator, there probably wouldn't be enough liquidity for there to be a there's a limited number of buyers and sellers of these commodities. So, but they need a liquid market so that they can make it work. So they open it up to
[05:16] speculators like you so that you can bet on the rise and fall of that future. So those are the two different types of people that are involved in a futures
[05:28] contract. The hedggers that are involved in the cash market and the speculators, that's you, who only cares about whether the futures contract goes up or down.
[05:40] the futures contract goes up or down. Now the uh the E- mini is a special type of futures contract. It doesn't have a deliverable per se. It is cash settled and it has a certain period of effectivity. These contracts are
[05:54] generally they generally last for a quarter one quarter of a year and so they expire at various points throughout the year. So a the E- mini S&P futures
[06:06] as well as all the other equity contracts e equity futures contracts contracts e equity futures contracts expire in March, June, September and December. Those are the expireies. Now there's nothing special about this.
[06:20] However, there are some speculators that will look at these futures contracts and they will do special things with these different expiring contracts because you can have more than one of these contracts active
[06:35] at any one time and this is particularly um true with various types of commodities especially in agriculture and energy and so forth. So like for instance oil they don't have quarterly expirations they have monthly
[06:49] expirations and this is important uh to uh various speculators because they want to play and when they want to provide liquidity but they do it in such a way that they'll play an arbitrage or a what's called a calendar spread between
[07:04] contracts and they will uh go long and go short either the front or the back month of the contract and then they make profit by the difference in the profit by the difference in the fluctuation between uh those two
[07:19] differently dated different expiring contracts. might want to do this. And it's particularly true in um with like refineries or any other industry that has shorter term rollover in terms of
[07:34] the underlying commodity and they use these spreads as their kind of margin that will then drive the business of the underlying commodity. So that again is very very different from what you do because you don't do that. You don't go
[07:49] and play calendar spreads on futures. You don't do arbitrage between a uh a You don't do arbitrage between a uh a 10-year uh bond and a two-year note. You have no idea what that even means. All you care about is if it goes up or down.
[08:05] So same thing here with the E- mini futures. The E- mini futures is a um a solid product, one of the most widely traded assets in the world, the one of
[08:18] the most liquid markets in the world. And there happen to be options on these things as well. Now, the options, they do have a time premium associated with them. In fact, the options on a futures contract are really no different than
[08:33] the options on any other type of underlying asset. Now there are different types of option contracts. There's generally two types. There's the American and European style. And those have to do with how uh
[08:46] exercise how you exercise those things and whether or not there is any assignment. The equity options contracts including on the S&P and the E- mini futures are European style. So there is no
[09:01] possibility of early assignment like you get with stock futures which are American style. So they are more conducive then for a speculator who is trading at the end of expiration of an options contract
[09:15] because you don't have to worry about early expiration. Matter of fact, you don't have to worry about it at all because there is no uh expiration. Now I guess that is the other big
[09:28] difference between the E- mini futures and the S&P. E- mini futures. If you have any leg of your options strategy that is in the money at expiration, you
[09:40] will be assigned a futures contract. No getting around it. No matter what you will, if it's just one penny in the money, you are going to get assigned, which is it could be your plan to do
[09:53] that. Uh it may not be your plan or you may just want to avoid it altogether. With the SPX, you can't get assigned because there is no actual SPX. It doesn't exist. It's a calculated index. There's no way to actually assign you an
[10:09] There's no way to actually assign you an SPX because it's vaporware. It's like Bitcoin. So, it is cash settled. And for that reason, some people prefer to use the SPX because it's cash settled
[10:24] for zero DTE strategies because they do not have the temerity to be able to not have the temerity to be able to actually or even just the discipline to to be able to handle it or just don't understand it and it's just easier for
[10:38] them. So, they can sort of dismiss futures. They say, "Ah, futures, those money with those. and they don't really understand the value of it and so they understand the value of it and so they choose the um the other option which
[10:51] actually is a worser option overall. Why is it a worseer option? The S&P is a worseer option than the E- mini futures primarily
[11:04] for the fact that it is not traded 20 around the clock like the futures contract. The E- mini S&P futures is traded around the clock 23 hours a day. traded around the clock 23 hours a day. It opens at 6 p.m. one day, closes at
[11:18] 5:00 p.m. the next day, and there's an hour where it's off the markets, off the books. So, that presents incredible opportunity for the speculator to take different positions or get out of positions
[11:31] anytime they want. With the S&P, you're limited to market hours from 9:30 a.m. Eastern time to 4:00 p.m. Eastern time. That's it.
[11:43] If something happens outside of the market, you have to wait for the market to open and then you only have a 6 and a half hour time frame in order to execute your trade. With futures, you have no such limitation
[11:57] around the clock in and out anytime you want. Another big difference between the want. Another big difference between the two,
[12:10] is certainly a huge difference. I mean, even beyond, you know, when you're talking about um analytics or whatever, and I had mentioned that the S&P isn't a it's not actually traded. There's no volume. You can't besides the fact that
[12:27] volume. You can't besides the fact that it's only open from 9:30 to 4. And the only type of analysis that you can do is between those hours and it has to be price oriented analysis. You cannot do volume oriented analysis because there
[12:39] is no volume. With the futures, you have all of the data that you need, all of the hours, and the continuity of a 23-hour a day contract that also has actual volume. That's because it is a real thing. It is a real contract that
[12:54] real thing. It is a real contract that is transacted between um speculators and also hedgers. So, that's another huge thing. As a matter of fact, when we if we do trade the S&P, we still need to use the E-
[13:06] mini futures to do our analysis so that we can get an accurate read on where price uh might be going or where the volume is, where um where it's showing value and where it's not showing value. Otherwise, we would have no idea.
[13:21] And certainly, most professional traders do not use price action as their guide to figure out where the value is in a particular asset. They use volume. they use orderflow. Can't do that with the S&P.
[13:35] S&P. So, all of these reasons make for a very So, all of these reasons make for a very strong argument for the E- mini S&P futures and it's the reason why we trade it here at zero-d.com.
[13:53] trading zerodte strategies. There could be an exception uh made if you were developing a final hour strategy where you're opening and closing it on those on the final few
[14:06] minutes of the market and uh there might be some uh benefit there if you have a very large account. Now, there's another big benefit for the E- there's another big benefit for the E- mini futures that I didn't bring up, and
[14:21] that is if you are a small player, a retail trader that has under $25,000, or even if you have a large account and you only have $25,000 of margin to play with, which is very possible. You could have all your money tied up in different
[14:36] stocks or whatever and only have a certain amount of margin. you're trading the S&P and you day trade, which is what a zero DTE strategy
[14:51] trade, which is what a zero DTE strategy um dictates to day trade, you only have three opportunities for trades in any 5day rolling window. Otherwise, you will get tagged as a pattern day trader and your broker will shut your account down.
[15:09] Just shut it down for 90 days. No trading for you. None. Zippo. Nada. trading for you. None. Zippo. Nada. Because you are a criminal, a pattern
[15:21] day trader. There is no such restriction with futures. You could trade the E- mini futures a thousand times in a day and never be deemed a pattern day trader
[15:36] because it doesn't apply. Simply does not apply. not apply. So considering that most people that are trying a strategy like uh zero DTE or zero- DTE for the first time and they're
[15:50] maybe not willing to put a huge money until they get used to that strategy or if you just have a smaller account. Unless you trade the EMI futures, you're you're out of luck.
[16:09] And particularly and particularly now that the um CBOE and the CME have now uh increased the number of days that there are weekly options on the S&P. Friday, but now they've added Tuesday and Thursday. So now you have five
[16:26] going to trade it with the S&P. You would have to jump through hoops in order to avoid being a pattern day trader or just sacrifice which days that trader or just sacrifice which days that you can and cannot trade.
[16:41] With the E- mini futures, you can trade every day. No worries at all. None whatsoever. And when it came down to what I had mentioned earlier, the uh the thin margins and one reason why you might
[16:53] choose the S&P because the commissions are are less on that and that is you know that is a consideration for a lot of people with smaller accounts only if you are trading the other way they trade zero DTE with high probability
[17:10] zero DTE with high probability strategies with huge risk tiny bit of profit, they have to go after they have to use an underlying security that has very very little commission on it because they can't
[17:25] afford it. That's because the amount of commission versus the um potential profit that they're going after is just way too big. way too big. But with the way we trade zero DTE doing
[17:38] asymmetric trades that are relatively low probability compared to those. However, our risk is very very tiny if it if there's any risk at all and the
[17:51] it if there's any risk at all and the profit potential is huge. profit versus our return, our capital use, our return on capital is 10 to 50
[18:05] times greater than those people doing the other way of zero DTE. So therefore, the commissions even though they are higher are of little consequence to us because we're you we're literally using 20 times less money going after the same
[18:22] amount of profit. So we can go after much larger profits with just a little bit more money, just a tiny little bit, but still onetenth or a tiny little bit, but still onetenth or 115th of what they're using. And now the
[18:36] commission versus the profit they're going we're going after is tiny. Even though it's more expensive per contract, it's still tiny. it's still tiny. Again, that is why here at zero-d
[18:55] we use futures. It is all around the better product. End It is all around the better product. End of story. And with zero-d as the underlying strategy, it is a great combination.
[19:15] when applying for futures with TDM trade, the application asks your object objective and gives two options, speculating and hedging. Yeah, you're a speculator. You're not a hedger. [laughter]
[19:30] not a hedger. Most people don't even understand what a hedger is. They have this idea that they're going to hedge their their um their positions when all they're really doing is reducing their profit potential. They're not hedging
[19:45] their positions because they have no idea what that actually means. So yes, you are a speculator when you apply for for a futures account. Okay, that's it. That's all I've got to say. Now you know the rest of the story.
[20:03] E- mini futures are the way to trade zerodte and zero-d zerodte and zero-d is the best darn strategy out there, bar none. really a professional strategy
[20:18] and it's more than just a strategy or an alert service here. Here it is also well you come here really to learn how to become a professional trader.
[20:30] Not a speculator, not a retail speculator, but a professional trader. That's what zero. And it doesn't matter if you're new to it or not, or if you're, you know, a seasoned veteran, you're going to learn the professional
[20:44] you're going to learn the professional way to trade. How about we see some examples? What kind of examples could you want? I'll do that for next time. I will show uh examples of um I I'm not sure exactly
[21:00] what you're looking for, but we'll um we'll find out. And uh next time I talk about futures, we'll put bring up some examples. All righty. Thank you very much. Peace to you all. See you next time. Have a
[21:13] to you all. See you next time. Have a good one.