Zero DTE Options Trading Lecture Notes

Introduction

• High interest in Zero Days to Expiration (Zero DTE) options trading in recent years.
• Trading is fast-paced, can be profitable, but also risky.
• Presentation by Tammy Chamblas, experienced Zero DTE options trader.

Why Zero DTE?

• Immediate feedback and fast trading.
• More trading occurrences with shorter-term options.
• Ability to make money with multiple trades, even if individual trades yield smaller profits.

Transparency in Trading

• Tammy shares daily results on social media groups.
• Commitment to posting wins and losses for transparency and realistic expectations.

Zero DTE Basics

• DTE: Days to Expiration.
• Zero DTE involves options expiring the same day.
• Requires constant market monitoring due to rapid changes and potential losses.

Characteristics of Zero DTE Trades

• Faster decay compared to longer-term options.
• Volatility and market movements greatly affect trades.
• Greeks (Vega, Delta, Gamma) play a significant role in risk assessment.

Risk Control Strategies

• Stops: Essential for managing risk and capping losses.
• Position Sizing: Recommended to risk only 1-2% of account per day.
• Paper trading suggested for beginners.

Strategies for Zero DTE

• Directional Buying: Call or put options.
• Credit Spreads: Selling put or call spreads.
• Iron Condors: Suitable for uncertain market directions.
• Multiple Entry Iron Condor (MEIC): Advanced strategy with controlled losses.

Recommendations for Beginners

• Start with simple credit spreads.
• Learn to manage a single trade before attempting complex strategies.
• Educate yourself via resources like YouTube and trading groups.

Suitable Products for Zero DTE

• Cash Settled, European Options (e.g., SPX, XSP) are preferable.
• High liquidity options are recommended to avoid issues with exiting trades.

Risk Management Techniques

• Use stops to cap potential losses.
• Be wary of market volatility and slippage.
• Maintain a trade log for detailed performance tracking.

Measuring Trade Performance

• Manual tracking using spreadsheets recommended.
• Track metrics like trade win rate, average credit, and slippage.

Learning and Improvement

• Continuous learning through platforms like YouTube, Facebook groups, and Discord.
• Engage with community for shared strategies and experiences.

Conclusion

• Zero DTE options trading is challenging but rewarding.
• Requires thorough understanding of strategies and risk management.
• Emphasis on continuous learning and adapting to market changes.