Lecture on Zero DTE Options Trading Strategies

Introduction

• Speaker: Mike Bella Fury, Seth Freyberg, Garrett Dryan
• Company: SNB Capitals, a top proprietary trading firm in New York since 2005
• Objective: Learn a method with a significant trading edge, particularly for zero DTE (Day to Expiry) options.

Concept of Market Edge

• Importance of having a unique edge to avoid gambling.
• Zero DTE Options: Strategies utilizing options contracts expiring the same day.

Series on Market Indicators

• Current Lecture: Second part of a four-part series.
• Focus: Understanding market clues via ETFs (Exchange Traded Funds) to determine market tone.

Garrett Dryan's Method

Market ETF Watch List

• Created for assessing market tone: risk-on (bullish) or risk-off (bearish).
• Helps in identifying whether big money is bullish or bearish on a particular day.

Why Use Market ETFs

1. Trading Focus: Identifying sectors/areas showing strength/weakness.
2. Market Tone: Determining daily risk appetite (risk-on vs. risk-off).

Offensive vs. Defensive ETFs

• Offensive ETFs: Indicate risk-on.
  • Technology, consumer discretionary, semiconductors, high growth tech.
• Defensive ETFs: Indicate risk-off.
  • Utilities, consumer staples, healthcare.

Thematic Macro Themes

• Interest rates, yields, inflation, and their proxies (e.g., US dollar, treasury bonds).

Using ETF Filter

• Columns:
  • Arval (activity volume), percent change from open, absolute change from open.
  • Color-coded for quick visual analysis.

Example Day Analysis

• Weak Market Day: High activity in high-yield bonds, volatility, and treasury selling.
• Signals: Risk-off indicators with growth stocks and consumer discretionary being sold.

Options Trading Strategies

Aggressive Strategy (High Conviction)

• Use when ETFs and market internals align negatively.
• Example: Put Debit Spread.
  • Buying and selling puts to profit from expected market downturn.

Conservative Strategy (Low Conviction)

• Use when market signals are less certain.
• Example: Call Credit Spread.
  • Selling a call spread to benefit even from minor market movements.

Conclusion

• Strategy Flexibility: Choose strategy based on conviction level.
• Professional Insight: Use ETFs and market indicators to inform trading bias.
• Promo: Opportunities to learn more via workshops and future series parts.