Zero DTE Trading on the SPX: Most Do It Wrong

[00:01] what we're going to do is we're going to take a look at zero DTE trading on the SPX most people do it wrong so I'm going to show you a little uh tip and insight approaching it so let's get started we're going to check things out and

[00:14] we're going to hop on over to the screen all right so as we take a look at like my paper trading account I deal with uh when I deal with coaching and mentoring students and so on um so today's kind of a good day for me

[00:26] to kind of place a few different trades so what I want to do is take a look at a zero DTE a lot of people like trading the zero DT and I get it I get it we want fast money people want it quick uh but zero DTE isn't always the best thing

[00:39] in the world to trade so you know a lot of people what they'll do and they go to about an hour after the market what they'll do is throw on like a put vertical and a call vertical so what we'll do is we'll build out that trade

[00:52] again keep in mind this is a little faster uh than uh I do when I teach give you the idea okay so we'll throw on a few different spreads we can analyze the trade if you like and we've got this uh kind of uh risk perspective right

[01:07] uh kind of uh risk perspective right here okay so uh risk analysis now what's happening is I got a Theta of 104. I'm trying to pull in here about 95 credit so about 100 bucks but I'm just getting about 400 bucks so you got to

[01:22] put in like a stop in play uh when you do these kinds of things now the way of like this they'll either either do vertical on one side than the other but that when you do zero DTE trades everybody knows that you get a big Theta

[01:35] right so you got a huge Theta but the problem of this is you got a lot of price risk that also comes in which most people don't even think about so we could go ahead and put in this trade and I will do one here in the meantime uh

[01:48] why not so I'll just put in my Superman trades that's zero DT but let me show you a different way and another approach to doing it okay so here's another way that yeah sometimes I'll play around called

[02:01] mailbox money or lunchbox money okay stocks expected to move 16 points okay there we go we got filled on that iron Condor uh sock is expected to move 16 points okay so uh Market's already down 18. so it's already moving more than the

[02:14] 18. so it's already moving more than the expected move so I got 41 1 8 okay so it's uh that's the current price okay 4118 okay if you're struggling what we're thinking about is saying okay well we already moved the expected move what

[02:27] if we come back onto a rubber band again it doesn't always work uh but what expected move to gauge yourself okay so 41 1 uh seven or forty one one eight can we move more than expected move today sure we could but we're already at the

[02:41] counter Trend bounce back up yeah we might uh but we already moved the expected move so what am I thinking I'm thinking well once a stock here's the logical and rationale let's say a stock is kind of right here in the middle it's

[02:54] we get to that expected move it'll come back to the average okay so usually back to the average and we're already past kind of that average now could well let's say we play a counter Trend bounce so now what I'll do is for um

[03:09] well now it's four 119 and what we'll do is we'll actually 119 and what we'll do is we'll actually add uh call it 16 points okay so we're looking at 41.35 so I'm looking for this thing to hit about 41.35 which is

[03:23] exactly where I place this other one in a way on the uh position but let's just buy I'm going to go ahead and do a butterfly on this one so we'll Analyze This okay

[03:37] you don't overlap your strikes I got this uh iron Condor crap going on over here and I got 41 25 I got a 4130 and a 41.35 41 25 41 30 41 35.

[03:50] a lot of stuff cooking in there okay so um I got a ton of stuff here going on butterfly right here and I'm thinking it'll snap up because what's happening get a negative Theta but remember at the end of the day uh these options kind of

[04:05] what you're trying to do is get it into that zone and if not what you're doing this is the difference iron Condor butterfly iron Condor butterfly iron Condor more risk butterfly less risk iron Condor more money spent butterfly

[04:20] something like this what you could do is look for pinning it trying to get it do is buy a butterfly and we're trying to get it around that zone I'm gonna go trades so I'll go ahead and pop it in there see

[04:34] if it gets filled right I'm working the order so what I've got here is working order SPX 4125 35 they're not going to fill it because it's working at 65. oh it failed oh my God maybe just a paper platform

[04:49] does that kind of crap um doesn't always happen but look okay trades where's my Superman trades they're there okay so I got SPX right here so I got a handful of different things going on

[05:03] so now I've got a butterfly and look at this a lot cheaper than what most people do and slowly with time it's going to wiggle around and I'm trying to get it but what's going to happen is here and you can't time it with the um with the

[05:19] function and behave like that but the minute I'm in I'm already trying to get out so look I filled at 35 cents oh look at that it's already popping 65. look I'm risking 30 on this if I can get out with 60 bucks great now you could try

[05:32] what you will do is take another one take another one take another one but people they try to shoot for verticals on zero DT I'm over here shooting butterflies way cheaper cost effective you know a couple extra bucks here and

[05:46] there to uh throw them on not really I guess if you're doing but iron Condor but it's it's the same number of Trades uh number of contracts but uh oh what you're really doing is if you're doing only verticals uh butterfly will show up

[06:00] you're doing only verticals on your zero DTE uh then the um obviously so anyway I got this one going so what we're going to do is we're going to analyze closing trade I already got in for 35. I'm going to go ahead and put

[06:15] this trade in to see if I can already start getting out already got in it so let me already put one in for let's aim for 75 cents for now so that's basically double um and then we'll go in

[06:28] and we'll set it and we'll see hey work it for another couple hours as price is wiggling maybe it'll get felt and that's it that's basically simple day trading in terms of the SPX doing things through a butterfly with some zero DT options

[06:40] and a little more conservative on the capital front so I hope that helps gives you a little insight maybe something to think about when you're trading and uh much more so than a lot of other uh videos out there to give you a little

[06:53] bit of a perspective and taste of what you could do if you traded some me I will see you in the next video keep learning keep educating yourself and um learning keep educating yourself and um keep working I'll see you next time