I May Have Found the Best Hour to Trade 0 DTE

[00:03] to take a look Jacob and the team dug deep into this one as far as the yeah they they they really got I I was privileged to see this beforehand they really got they really got granular here with with zero days you're going to be

[00:17] they're going to show you how damn hard it is in an hour by hour basis to make money in the zero DTS by selling premium but you're going to go well then why can't I just buy it well it ain't that easy either so yep um this is what we

[00:31] call the classic zero sum game let's do it so in the right underlying zero GT markets they're fast and they're highly liquid so far research has generally

[00:43] supported rapidly managed trades on with pnl thresholds what that means is if you have a profit take it no hero crap as we say you have a profit in the zero DT is just take it move on but what happens to traders who stay in for the ride

[01:00] because our research has shown that if you're shooting for a 25% profit you do really well but if you stay in for the ride you do really bad so we're gonna break it down let's go to next slide you know before you go to the next slide s

[01:14] you can stay there it's fine I mean think about think about what it's what it's saying right now you know th this is like zero days made the product so small made this huge product remember what SPX is I mean it's a huge index SPX

[01:30] is trading you know $5,800 it made a $5,800 it made a $5,800 stock affordable for under capitalized accounts they can buy far out of the money options they can sell

[01:45] out of the money options they can sell spreads it it almost is the opposite of everything that we've talked about for longevity of staying in the market we've always talked about here at Tasty going 45 days out giving yourself time to be

[01:58] right you know not being very heavy into the nuances of daily movement this is the exactly the opposite here and they got to take a look at really how this pricing works out here and see where the edge is

[02:11] go please well we're going to look at everything we're going to look at 50 Delta straddles to 10 Delta strangles we're going to buy it now here you buy it at the start of an hour and you sell

[02:25] it at the end of the hour or you sell it at the beginning of the hour you buy it I meant because these are short strangles so you sell it at the at the on exactly at like 9:00 you buy it back at 10 you sell at 11 you buy it back at

[02:40] 12 okay now could you say well would the opposite be correct if I just if I just opposite be correct if I just if I just bought them sure that's fair um everything everything is considered to be done at Mid price and just

[02:55] remember there's lots of times when there's decent profits in here but because you have to do it hour open to hour close then that's where it goes what you're going to see is something very consistent here these are short

[03:09] strangle short straddles and 8:30 to 9 yeah the first hour the first hour because they want to do it on the hour 9 half an hour so it's like basically if you did it right on the opening and Clos

[03:22] it at 9 o' what you're going to see on all these slides is 11:00 a.m. to noon Central time is probably the strongest period because that's where we have the average the net average p&l is positive all the other ones are

[03:34] negative um which was kind of funny to me but the the other piece to this is that you know the most important piece to this to me is the net average p&l is

[03:46] negative on all these but if you did it when you took a certain percent profit which we're not showing here they were all positive that's that's correct and S here remember when you're doing back testing in here you're talking about mid

[03:58] testing in here you're talking about mid price mid price gets to an extreme like because things start hitting the fan a mid price goes very very like high and then very very low so you know these numbers here are you know take it with a

[04:11] little bit of a grain of salt you have no slippage in here we all know rarely do you get filled at Mid price until something moves one way or the other and it has to move against you so you could say that net average p&l is basically

[04:24] zero in my eyes okay yeah well it's negative across the board but anyway I get it at Mid price the important thing here the important thing here is it's not a big number it's not a plus it's it's not a

[04:38] number it's not a plus it's it's not a huge minus it's kind of a scratch and side would not be too much different just so you know and the crazy the crazy thing here is that again if you manage to 25% of

[04:54] Max profit every single one of these would be a winner let's go next slide that's correct so these are all going to look very similar these are 40 Delta strangles you know again you're not

[05:07] going to can't tell the difference between many of these the numbers are all going to look pretty close to the same you go to 30 Delta strangles John which is the next slide you're going to see all the numbers look just about the

[05:19] same you know the middle of the day is the best but the numbers look get smaller and smaller as we get further away from the at the money but the percent profitable it and the average the net average p&l are almost virtually

[05:33] the same regardless of what we do go to the next one John which is 20 Delta almost all the same here everything's kind of you know just all within $10 not

[05:45] worst is the last hour because that's always the hardest all the all the percent profitability is virtually the same the cash the average gain goes down further out of the money if you go to 10 Delta strangles John which the next

[06:00] slide see the numbers just about the same I mean they're just further out of the money but not not a big then the average loss goes way down but again the the percent profitable drops here I'm I'm only pointing this out because again

[06:15] every one of these numbers has a positive p&l if you manage early let's go to the last Slide the takeaways so and here is really good really strong takeaways when it comes to zero DT option positions each hour selling at

[06:30] back at the end was most likely a loser over time midday was slightly Kinder than either the close or the open even though each individual hour of trading was unlikely to be a winner the good hours tended to be more good than

[06:45] the bad hours were bad and note that all strikes were fixed at Market open more different results in fact they're all going to be positive there is no best time for zero GT option Sellers and these results

[07:00] reinforce the importance of trade management by being persistent and mechanical many low probability hours can be combined into high probability can be combined into high probability trades