Half Way there! 0DTE Vertical Spread Trade Results / SPX Expected Move / Implied Volatility

[Music] [Applause] [Music] hey everyone welcome back to my channel if you're new around here hi hello i'm ariane i am a full-time options day trader i focus mostly on the s p 500 and on same day expiring contracts aka 0dte my trading is really simple my bread and butter is selling credit spreads on spx that's the ticker symbol for the s p 500 i pretty much trade the same two strategies over and over on spx those two strategies are selling out of the money verticals and selling at the money iron condors also known as we're halfway into 2021 i have traded these two strategies nearly every monday wednesday and friday and they've performed wonderfully if you are new to options trading you need to add this strategy to your trading toolbox i mean even google says so selling out of the money credit spreads is a tried and true strategy that all professional day traders use i previously made a video of my trade results from selling out of the money spreads in 2020 i will link it in the corner but 2021 is not the same market structure as 2020 and of course and when i look back at my old videos um i was able to get pretty far out of the money like in the morning when i'm selecting my strikes to sell and a lot of um i've seen a lot of recent comments that say on those videos oh how were you able to capture 50 cents so far out of the money and that is due largely to implied volatility and the expected move and so i wanted to in this video dive a little deeper into the expected move is one of the first things that i look at when i am logging in in the morning the expected move at least in thinkorswim is shown in the upper right hand corner of the options chain it's expressed as a point value and a percentage there's a manual calculation that you can do to figure out this number but you're not going to want to do it every day so if you can't find it just ask your broker where it is the expected move is just what it says it is so it's the expected move of spx on that time frame so if i log in and i see 12 there i can expect that the premium prices are priced for a 12 point move up or down on spx before these contracts expire now that definitely doesn't mean that that's what spx is going to do it could say 12 but it could move 40. like the market is gonna do whatever it wants to do but i know that the premium prices are priced for a 12 point move when i look at the option chain i only know one thing with certainty and that is that that number is going to decrease to zero and that everything that i'm looking at eighty percent of the things the options that i'm looking at are also going to decrease to zero all this money all this premium will be gone at the end of the day so where can i position myself as a seller so that i can capture at least 50 cents for my spread and stay hopefully as far away from the at the money strikes as possible the expected move also known as the implied move is defined as the amount that option traders believe a stock price will move up or down it can serve as a quick way to see where real money options traders are pricing the future of a stock the bigger the move the more uncertainty or implied volatility is priced into the options it's really important that as a same-day expiring contracts trader that this numbers in your scope of awareness when i'm choosing my entry for an iron butterfly like this number is really critical to me but when it comes to vertical spread selling out of the money vertical spreads um this is really just a gauge of how far away from the at the money strike i'm going to be able to position myself i would say on average at the open the expected move for spx has been around 25 i don't know if there's you know some fancy calculator back testing to figure out what the exact average number is but just in my experience it's been 25 so when i see an expected move above 25 i expect a more volatile day swings up and down and when i see a number like 20 or below i expect a calmer more range-bound consolidating type of day and in comparison to last year 2020 i would say and i'm just guesstimating here that the average expected move at the open was like 35 so you know imagine 40 to 50 point swing days um so all that to say that's why you can't get as far away from the at the money strike as i had previously been getting the expected move just isn't that high and the market structure the market environment has changed also having said that it's just been way less stressful trading this year than last year um just less stressful in general i'm sure that applies to more areas of life i wanted to share our trading log year to date i will go over that now this is through june 2021 i won't spend a lot of time going over this but i want to show you how simple the trade can be there's several ways to sell out of the money verticals the way that i do it and the way that we alert them in our forum is very simple we're doing one trade every monday wednesday and friday we're doing either the put or the call side we're always doing a five wide spread so the width of these strikes is always five dollars we're looking to enter for around 50 cents looking to close when the price of the spread has decayed to around 10 cents all these numbers are based on taking 10 contracts of course the strategy is scalable you can do one contract you can do 50 contracts um and these trades are all in one price out another there's no legging into an iron condor there's no management of it in between that although some of our members do iron condors that's totally fine but this is the way that we alert them um and you can see there was no losers in me no losers in april but the beginning of the year started out really tough because that's when there was a lot of fear in the market and we were at the height of like political turmoil and as you know that moves the market a lot here is what our trade metrics look like based on a nine losers we've had an 86 percent win rate and so like i said this is using 10 contracts so that's less than 5 000 of margin and you could have already grown your account almost 200 percent more if you did not have a 3x stop which is what we use all right and you know what in my next video i will go over um like our entry criteria what we're looking for in the morning all these entries are within the first hour of the trading day all right my youtube friends thank you for your continued support i hope this video helped someone along on their trading journey um i i thought i would also give a quick update on first trade that's this free ish broker i've gotten a lot of um inquiries about them so this is not a paid promotion i'm not affiliated with them in any way i was only drawn to them because they're one of the only low-cost brokers who offer zero dte trading on spx and i started a small account with them a couple months ago i've been trading the same trades in that account whenever i remember to or i can coordinate it in the morning so just their execution is really all i care about because i'll never use their platform for actual charting all my charts are set up on td and i'm not gonna move any of that so their fill times is what is paramount to me just a couple things you should know the ticker that they use for zero dtes is spxw you cannot enter a zero dte trade in the final two hours of trading day you can't set a stop loss on the spread you can only set a stop loss on one leg there's no day trade counter thing like i think most brokers have so if you want to figure out how many day trades you've made in the last five days you have to go to your history and like count how many round trips that you made and finally the ticker price does an update on the mobile version so i don't know i emailed them they said they were working on it it's just kind of an annoying glitch that you have to look past so anyways thanks again see you next time bye

Channel: Axe Options

Views: 6,981

Rating: 4.9460917 out of 5

Keywords: options, firstrade, firsttrade, robinhood, creditspreads, 0dte, daytrader, sp500, girltraders

Id: -34cfvon794

Length: 9min 38sec (578 seconds)

Published: Sun Jul 11 2021