you must use a stop you cannot act fast enough to get out of a trade it can go against you faster uh then you can even start to put your hand on the mouse to close the trade the interest in Zer DTE options trading has exploded during the last few years it's fast it can be very profitable but you can also lose a lot of money if you're not careful so are you curious to get started but don't really know where to begin well we got you covered because here is the queen of Zer DTE Tammy chamblas hi Tam hi Tammy hi thank you well you have really been trading C DT for a long time what's the attraction for you I love it because it's immediate feedback it's fast it's interesting you can make a lot of money I found that with shorter term options you have more occurrences and therefore you can make more you may make less money per trade but you can do many more trades that's the big attraction and you share your results every day yes I do on the Facebook group and on the Discord group Quantum options Facebook group and Quantum options Discord isn't that a bit isn't that a bit scary I mean not old days are good days I post it regardless so I figure it's better just to be open and honest I'd rather not post just when I win because people may think I win all the time and I don't I try to post the Good Bad and the Ugly whatever happens I'm posting it so this interview today we are targeting people who maybe have been trading options but never tried Zer DTE let's get straight into it what is Zer DTE options trading the DTE part stands for days to expiration and if if you're familiar with options you've probably heard that term often people are trading 30 DTE 60 DTE or 90 DTE that's generally what people are taught zero DTE is a little different in that you have to watch the market all the time while your trades are on there are some ways around that but generally you've got to be very alert and and able to take action if you need to take action so let's go into some of the characteristics of uh a trade zero DTE that expires the same day Decay uh on longer term options happens very slowly on zero DTE options Decay happens fairly quickly but it's fairly steady throughout the day as long as the stock isn't moving very much the Decay is is steady throughout the day and in the last hour you get a big drop the Theta drop the other Greeks act a little different it can be more reactive to Vega and Delta changes and so volatility is important to be aware what what volatility environment you're in and Gamma at the end of the day can make or break you if the market starts moving at the end of the day you can go from a winner to a loser very quickly so it's acts a little bit different than longer term options yeah you really have those days don't you where you think everything is going just fine and then it takes five seconds and the whole situation is different you can get a big jump on the close Market on close a bunch of orders hit and the mark Market takes off and or a big down move and either one of those can take you out depending on what strategies you're working but if you are a risk averse Trader like I am myself actually you know this may sound a bit uh scary can you control I'm a risk averse person too you know anytime there's risk your emotions get involved and I've developed ways to be more mechanical in my trading that helps me control those emotions in controlling risk you can use a stop you can close early if you choose you know you can there's some various techniques like that you can do uh the nice nice thing about using a stop is you always know what percent of your account you're risking you know like if you're using a stop that's two times the initial credit that's the most you can lose assuming your stops just don't get blown through occasionally there can be some slippage some bigger losses than you anticipated but usually with a stop they're they're somewhat controlled and but that just all factors into the reward you get for zero DTE options you're rewarded for that risk on most days and then some days you take a hit and that's okay it's just part of it we will dig a bit more into the risk management but I I think before we should go through the different types of strategies that you can do on Zer DT like with all other option trading there is you know literally hundreds of strategies people are are doing but let's try to categorize them a bit and I guess the simplest one is just pure directional buying a call or buying a put you can pretty much do I was trying to think of strategies that you might not be able to do on zero DTE that you can do on longer DTE and I couldn't think of one offand other than maybe a calendar or something where you have different expirations uh but you could even do a calendar with the short leg expiring on zero DTE and that's that's it expires the day you put it on zero days to expiration it's just on that day dur while the Market's open most of the time people are selling options so directional thing strategies like selling spreads is a good idea put credit spreads call Credit spreads a lot of people do those and whichever way the market is not moving just put on the other side and those do pretty well my personal favorite is iron Condors because I don't know what's going to happen when the Market opens it can go up it can go down I'm terrible at guessing Direction on market and so I like iron Condors because you know you can trade within as long as a stock stays within a certain range uh you do fine and iron flies are another one I don't particularly trade those but I know a lot of people do trade iron flies on zero DTE and do pretty well with those and again there's ways to control your risk on those always using a stop basically so that's that those are some of the strategies that people do I also love the iron conders those are my favorit but for beginner where would you recommend to start yeah for beginners I would start with the credit spreads just understanding those and keep it simple one-sided and learn how zero DTE works I have seen a lot of beginners try a lot of different strategies they'll try one a couple of times and if they take a loss they'll say well that one doesn't work I'll try something else and go try a different strategy I will say all strategies can work you have to understand the strategy and when to use it how to how to manage it it's finding what you like the best some people like flies some people like iron Condors like you and I some people like credit spreads a lot of people do a lot of different things and have been successful just because you take a loss or a couple of losses doesn't mean that strategy doesn't work just keep at it and focus on that strategy and learn everything you can find others on YouTube and on the internet who trade that strategy learn what you can from them how are they trading it what are their typical returns and what can you expect from that strategy so keep at it and paper trade first always and you can be successful at zero DTE and the nice thing is you get quick feedback you can try again tomorrow maybe today didn't work out and you try something else tomorrow try another spread further out of the money or closer to the money there's lots of things you can do are any underlyings better than others I think so especially for zero DTE because I think that the European style options that are cash settled are better for zero DTE because you don't have to worry about what happens to those options the 15 minutes after the market closes most options expire not right when the market closes but 15 minutes after like options on stocks and ETFs like spy earnings announcements and things come out after the market closes it can be risky to for those trade so that's why I like to trade cash settled options when you say cash settled options or European style we are talking about products like SPX which is following the standard and po 500 Index or the Mini version XSP for instance or similar versions on the other indexes yes index funds my favorite is SPX it's a large product but that's good because if you're trading zero DTE on spy there's not much premium on the day of expiration but SPX XSP is a good one R is another one ndx is important too just be aware of liquidity when you're trading uh I was going to say yeah because and and you can tell liquidity by this bid ass spread on the option chain SPX is usually about 10 cents 15 cents something like that indx may be up to a dollar or more just means it's less liquid and what that means is you'll have trouble getting out that you'll pay more to get out than you want to pay and increase your loss so pay attention to that uh liquidity yeah it's the worst if you cannot get out of a trade I did a couple of times try both on ndx and root and I had problems getting out of the tra it is tough sometimes I haven't traded them I've just looked at them and heard stories but SPX is very liquid it's one of the most heavily traded options in the market that and SPX so those are both good for liquidity sp sp I'm sorry spy Spy has the problem of it doesn't expire when the market closes it closes a few minutes or 15 minutes after the market so you'd want to take your risk off before so you'd have to close it before the market closes Let's uh let's get into the the the risk management uh part here you are in strong favor of uh using stop- losses I understand absolutely absolutely I used to trade seven DTE options I would sell seven DTE options on rut every Friday no stop just take what happens and then if it did go down or I lost some money I'd get out of it but what I found was that overnight risk which you don't have in zero DTE that's another great Advantage the overnight risk introduc and you can't get out if the market starts going down overnight you can't do anything about it until the Market opens the next day that's the real danger in trading longer term options and I know there's a lot of people that that don't recommend using stops on longer day options but on zero DTE options you must use a stop you cannot act fast enough to get out of a trade it can go against you faster than you can even start to put your hand on the mouse to close the trade always use a stop another risk management measure is position sizing uh especially when you're starting keep your size very small there is a lot you're going to learn it's just hard to tell you everything that can happen in a trade you're going to learn a lot when you start trading these I would start paper trading paper trading is not a good proxy for what really is going to happen in the trade but you can learn the mechanics of putting the trade on putting the stop on watching what happens and how to manage the trade what I recommend on position sizing is don't risk more than 2% of your account if you have a small account like less than $10,000 you can probably bump that up to 5% uh but if you can keep it to 2% and I still trade by that no matter how big my account gets I'm only risking really one or two% at this point in my trades is that per trade or per day that is for the whole day um um how much I could lose in my account on the whole day so if every trade that day went against me and I I figure out how much I could lose in a trade and that's a good thing to focus on focus on how much you can lose rather than how much you can make especially when you're starting out try to keep control of the size of your losses that's the best thing you can learn as a new Trader and is uh managing the size of your losers another thing to be aware of on managing zero DTE that's completely different than longer term options is all the options at the end of the day are either going to be in the money or out of the money the out of the money options are going to greatly Decay throughout the day let's say you put a trade on I usually do spreads I don't trade undefined risk you you've got a credit spread or debit spread or an iron Condor where you've got the credit spread on both sides put credit spread or call Credit spread toward the end of the day those out of the- money long options will Decay down to zero usually within the last hour of the day if they will be worthless if you have a stop on a spread and have a a leg in there that is worthless that trade will never fill no matter how high the price gets on your stop it will never fill one thing you have to be aware of with zero DTE options is either put a stop on the short leg or if you put stops on spreads toward the end of the day when that long option is worth 5 cents or less convert that stop to a stop on the short leg only and that way you won't ever get caught with a trade that's not going to fill and it's going against you so that's that's a very important thing and I always try to make sure that people understand that because it's one of the biggest risks if nobody tells you you just don't know until you experience it and uh that that that can happen but even if you are very careful in setting your stop losses on all trades some days it will not work some days something will go wrong what can go wrong with the stop losses with stop losses uh there can be a big intermittent move let's say Trump makes an announcement and the price jumps or drops 10 15 points and your stop fills at a higher price than you wanted that's called slippage you can experience High slip AG on fast moving days and if you have I recommend I don't recommend placing limit orders anymore stop limit orders I used to do that because of some changes CBOE Chicago Board of options exchange has made we don't need to use limit orders anymore I just use Market orders and that will get you out regardless you may not like the price but you're out on a stop limit order if you use those don't recommend it but if you do use it what can happen is the price blows through your limit order without filling and it keeps going against you sometimes the price will revert and come back in and then it's within your limit and it your stop will fill but sometimes it you you could take a $10 loss you know multiply that times a 100 and you know that could be your loss on one contract um and with a limit order you've got unlimited risk there even though you've got a limit order you'd have to close it manually and that's happened to all of us we've all kind of learned that lesson it's just something to be aware of so if you do use limit orders always keep an eye on them and see what the Market's doing how close are you to being in the money if there's any big moves in the market check your stops and see that everything either got stopped out or is far away from the market if it's gone against you and you're showing a big loss just exit manually what is the worst loss you have experienced in this type of slippage where I have taken some big losses one of the losses this has been a few years ago it was during the GameStop meme thing I wasn't trading GameStop but other things were going on in the market and it was over $100,000 that I lost on one day and because of that I think I was still using limit orders and I only switched to Market orders in 2024 after CBOE made some changes that was painful I made it back but not that day it took a while to make that money back but it was painful so try not to make the same mistakes I made I'll tell you what I did and don't make those mistakes there are plenty of other mistakes everybody can make just don't do a mistake where you can lose a lot of money which Zer DTE strategies do you trade yourself I exclusively trade uh meic multiple entry iron Condor and it's similar to your strategy and I think you've had some people talk about that on your videos I enter uh iron Condors multiple times a day and I use a stop a 1x net stop so the most I can lose is the same as the most I can make that's how I like to trade I like to keep my losses very small and uh that trade has a low win rate like 53 54% but the number of occurrences it it's like flipping a weighted coin you have a lot of positive trades and the by using a 1ex stop I can only lose I can only Lo well generally only lose on one side some days the market goes way down stops me out of all my puts and then it goes way up and stops me out of all my calls those are my worst days where I stop out on every trade and that's where I limit the amount at risk to 2% so that's the most I can lose and I've got to be okay with that because it happened uh a couple weeks ago where every trade stopped out so I exclusively trade meic and there's one other strategy related uh multiple entry Trend following which is it's a directional strategy selling credit spreads away from the direction the market is moving so I'll do that in one account I don't trade that in all my accounts but would meic be a good strategy to start for a beginner you think oh I would not think so if you're new to options start smaller where you've just got one trade on um meic becomes a lot to manage and it takes a while to get used to it it once you have become successful just trading uh one trade at a time and understand those mechanics and you're comfortable with that you could start trying uh multiple entry iron condors and start small just do two entries or three entries and build up it can be overwhelming if you're new to options so I don't recommend starting with that but it's a great strategy very profitable not every day is profitable but that's never the case with any option strategy so how do you measure the results of uh zero DT trading what is your way of measuring your results I I keep a manual trade log I write down my trades and the price I got for the short option the price I got for the long option I enter that in a spreadsheet and I enter some statistics about that like what the width of the spread was if I stopped out what stop multiple I got out at what was the slippage so you can basically measure whatever you want to measure whatever is important to you I like keeping a lot of my own records and then I can double check those records against um you know the broker what they're reporting sometimes I'm working with tradier right now I can't even see what my trade filled at once it's done it's kind of out of the picture I've got to look at the trade confirmation the next day to see what the actual prices were whereas if I keep my own records I see what it's stopped out at and can keep records on that I keep an Excel spreadsheet I recommend doing that because it gives you good feedback I can total up my profits I can see how many trades stopped out versus how many trades won that day I can see what slippage is um I can see what average credit I'm getting for trades I would recommend for beginners to start farther out of the money trading selling like Delta five or 10 options and buying a further out- of the money option with meic I'm generally selling around Delta 20 to 30 it depends on the time of the day uh but if you start out with those far out of the money options that's a good way to learn they don't react as quickly and that's a good good trade to start with and I I think I couldn't agree more than when you say it's so important to keep some sort of a trade L it's so easy if especially if you have more trades than one in a day to think that you know how how your results are but you need to be able to analyze it and and analyze the data and see how it develops over time also a big numbers game isn't it exactly exactly especially with multiple trades you know you're taking hundred $150 per trade and it adds up over time you don't know how you're doing if you don't keep record you can't just you could look at your account balance but if you're trading other strategies then it's all mixed in together and you wouldn't know how one strategy is doing compared to another so I do encourage people to keep Good Records but what what have been your overall result let's say per year uh in trading Zer DT during last few years the last few years generally trading zero DTE I've made at least 20% return in the market most years the last couple of years I've been trading the meic and I'm averaging closer to 30% return and that's return on account not return on buying power if I counted it as return on buying power I would basically say that on meic I'm making about 100% on the buying power I'm risking every day in the past it was probably closer to 50% uh return on buying power on just entering one iron condor in the morning so it can be pretty profitable it takes a lot of work so you know zero DTE isn't for everybody it does require that you watch the market all day um I mentioned there ways around that there is automated trading that's starting to become available but even with that sometimes there are times when you need to watch it uh because they may not have features to get you out at the end of the day if the market starts moving toward your stop it hasn't hit your stop but it's in the money and that's when gamma can expand and so even with automated trading you have to jump in and take some manual action Sometimes some other things that I'll recommend for for new Traders is know when your options expire if you're trading at Apple when does and you're trading zero DTE so you're trading on the day that apple is expiring does it actually expire at the market close or does it expire the like Saturday morning sometime and settle Saturday morning or 15 minutes after the market that's important information to know because you still have risk on before that trade is closed and settled and then another thing people can get into to issues with depending on where you live what country you're in and what the trading rules are in the US we have what we call pattern day trading rules if you trade have less than 25,000 in your account you are not allowed to make more than three uh day trades zero DTE trades are considered day trades so you're not allowed to make more than three day trades in a five business day period so if you have an a small account less than 25,000 you're going to need to pay attention to how many trades you have on what happens if everything stops out if you close a trade that counts as a day trade if a trade expires worthless that doesn't count so you could have some good trades that expire worthless and you haven't used any toward your maximum of three day trades in a five-day period I would recommend for beginners just toward the end of the day get out at the last 15 minutes of the day there's a lot that can go against you and if if you aren't familiar with what can happen avoid it for a while until you want to learn more about it and then uh because you'll take most of your profits if you close uh 15 minutes before the close so I I have a personal rule to close my shorts at 5 cents I'm usually out at that time at least with most of my trades yeah that's a good rule yeah I leave mine on to expiration but I'm always watching very closely like today we came within about a dollar of one of my short strikes and I had my finger on the button if it was going down there I was gonna get out it's what are the biggest mistakes that you see beginners do I think beginners often and I was this way too I will learn a little bit about a strategy and go okay I think I got it and I'll go trade I might put a trade on where I'm trading one or two contracts and I'll think again oh I got this I know how to do this so then I'd bump up my trade size to five or 10 and get whacked and so the biggest mistake I see people making are trading too big there is so much that can happen that goes against you I still get hit by things that I didn't see coming like it just new things happen all the time and it just seems like every year I'll learn I'll take I'll get whacked and learn some new lesson but um it's less frequently that that happens but the other thing I see beginners do is think that they can uh get out manually and not use a stop believe me when you've had it happen where the market drops 20 points and you're well in the hole in the red uh you just cannot act fast enough to get out manually so I I always recommend using Stops Another thing to to watch out for especially with zero DTE are fees when you're making a little bit on each trade fees can take a big hit into that profit so try to find the least expensive broker you can that is a reasonable option broker you know has a full feature of the ability to play stops and things like that and monitor your trades look for the lowest fees you can um and because it's especially important with zero DTE they can eat into your profits I've managed to keep my fees my total fees were about 177% of my total revenue last year so so that gives you an idea of probably about the best you can do a lot of people can't do that and it's around 20 25 is what I hear most of the time that your total fees are about 25% of your total profits so that gives you an idea of what to aim for tell me where where would be a good place to learn more about ZD if you are a beginner I think there's a lot of good free resources there's a lot of YouTube videos some are good some aren't so good but you can learn something from all of them YouTube is a good place to go and you can just search for zero DTE or zero days to expiration there's a lot of traders that post their videos Facebook and Discord there's there's several groups that are involved in those I mentioned the quantum options uh group and the tasty trade options group are good on Facebook and if you'll send me an email Tam chamblas CH h m b L @gmail.com I'll send you a link to get you in the quantum options Discord group you're welcome to join there's a lot of information in there when you find somebody who is trading you're interested in how they're trading just send them a direct message and ask them about it find out as much information as you can from them without being too much of a pest here's my cat let's see there the cat's ear here we go Charlie's Got to make a appearance he always thinks I'm talking to him when I do these calls so he comes around thinking him I'm talk he always thinks I'm talking to him when I do these calls so he comes around thinking him I'm talking to him but uh there you go well I can also recommend you know the quantum options and the tasty trade options Facebook groups that you were mentioning they are both very good groups and most members are really helpful to to the others giving advice and discussing strategies and experiences it's a great place to learn there's a lot of members there that have traded a lot of different strategies a lot of different ways too not everybody trades zero DTE the same way so you know find somebody you see doing something that seems successful and ask them and find out the details of what they're doing I always recommend back testing which is another video that we did check out the back testing video that's a good way to you know one thing one advantage of uh zero DTE options is they're very much based on the probabilities of the options and less susceptible to earnings announcements or news they're still susceptible to news but you know little less especially if you're trading SPX one announcement in one stock isn't going to kill the whole market so little less susceptible to news and we do have a couple of other interviews about this different Z DT strategies so I guess a couple of them will pop up on the screen here that you can watch if you are curious great Tommy thank you very much for sharing your knowledge and for always being willing to help uh other Traders you're very welcome I love helping other Traders I was there one time too I always try to make it easier for the next guy than it was for me I kind of had to learn through the school of hard not but I can tell you about all the mistakes I've made hopefully you won't make those you'll probably make some others but you'll avoid the ones I made thank you John I appreciate your invite to doing this