Top 3 Technical Analysis Indicators For 0DTE Options

in this video the two zero DTE options experts on our trading desk teach you the top three technical analysis indicators you should be using to gain a huge Edge when trading zero DTE options I'm Mike B Fury and we're one of the top proprietary trading firms located in New York City since 2005 and proud to develop num seven and even eight figure per year Traders watch take notes and learn from a professional Trader on our desk so you can grow your trade trading account hi I'm Seth freudberg and I'm the head Trader of S&B capitals options trading desk here in Manhattan and there's been an absolute explosion in interest in trading options on the day that those options expire commonly known as zero DTE options and the thing about trading zero DTE options is that in order to be sustainably successful we're finding that you absolutely have to have an identifiable Edge a Criterion by which you can make the crucial decision as to whether whether the market situation for that day provides a high probability opportunity to make an awesome trade or not but most Traders have no idea how to identify those high probability profit days and so they sit on the sidelines while other Traders jump in on those opportunities and so today we're going to be starting a four-part series on exactly how to make that determination for zero DT options trades and how to find those clues that the Market's G giving you honestly sometimes screaming at you that it's time to put on a serious trade and not miss incredible Market opportunities if you're absolutely brand new to options trading and you don't know much about options and how they work we've created a video for you to understand options Basics and if you click the video appearing now on your screen it's going to lay the groundwork for you to understand the the strategies that we're going to be sharing with you today in this video Then when you're finished you can come back and watch the rest of the video here here at SMB we have this online options Mastermind group known as the options tribe trading team and recently Garrett dryan the guy I call Mr indicators at SMB made a presentation to our group that our members absolutely loved and so Garrett has graciously agreed to share what he presented to that group to all of you guys who are part of our YouTube family and today's lesson is going to be on the topic of the top three readily available indicators that can give you early in the day major Clues as to what kind of day we've got in the market what the big money guys are obviously doing and these three major Market internals these vital signs of what's really happening right under the surface give the informed Trader a heads up a clue that others may not be seeing by simply looking at Price charts a clue of how the day is about to play out so Garrett why don't you share with us exactly what these three crucial market indicators are and how they can be used to make awesome options trading decisions all right great thanks Seth um first let's just talk about some options really quick and then we'll get into the market and how to trade it so I like to trade liquid options just in general and that means the indices that means High beta Mega cap Tech names and when I'm trading these kinds of names I've got to know what the Market's doing especially if I'm trading SPX of course or or QQQ or something like that but even the microsofts of the world the Amazon the Teslas there's going to be a degree to which they move with the market so I I'm always tracking what the market is doing and so Within These setups I do trade zero DTE that's not my default by any means but there are some specific setups where I think that that's a good thing to do a lot of the times I'm trading weeklies and a lot of people ask me this I like the 30 Delta calls usually so I I do look at the price levels that I think that the stock can blow through but generally I'm looking at the 30 Delta calls or puts for short trades um spreads as well and then of course with these kinds of Market internals you can trade market neutral strategies because there are signals that are going to tell us sometimes that we're having a neutral kind of day right and that's when you might want to play for something that isn't going to be a trend day but today we're going to talk about about Trend days in a very specific kind of trend day and we're going to use these Market internals to help us identify them the question that we're always asking is what kind of day are we having right and there's different types of days so we already kind of mentioned this but of course the trend day there's the reversal range day you have low volatility High volatility neutral bullish bearish and these Market internals are going to inform us on all of these things so it's all about the context and and this is because there are higher time frame participants that are in the market on some days and we want to be able to detect those fingerprints so only 10 to 20% of days are Trend days so this means that we can't just be trying to trade a trend day every day or else we're just going to get chopped up right so we have to be really selective when we're doing this so we need signals we need context we have to understand what's going on and the reason that the higher time frame participant thing is so important is because when you have big players big funds and institutions that are participating in the market on that day if there's a big CPI report there's a big technical breakout there's something that's getting bigger players involved that want to be involved for not just that day but for weeks sometimes it takes them the entire day to execute their position so you just get buying all day or you just get selling all day and that's one of the Dynamics that can create these kinds of trend days so we need a system for this let's talk about the market internals so these are just metrics from the exchanges they're issued from the exchanges directly that describe the breath and the underlying strength Behind these moves okay and what that means really is as Seth pointed out the vital signs beneath the surface so we're going to look at the stocks in the indices in order to assess the health of the market on that particular day just in general these Market internals measure the participation right we talked about that higher time frame player and when we have a trend day we really want High participation right because that's what's going to follow through low participation days are likely to fail they're likely to chop and reverse and in the end of the day you look back and and it was usually a range right it was something that went up and went down but on a trend day we're talking about something that only goes up and only goes down generally so there are three major internals that we track and let's get into the first one the V ratio this is the ratio of the volume flowing into the up stocks to the volume flowing into the down stocks okay so you're taking all of the volume of the stocks that are green on the day and you're dividing that by all of the volume of the stocks that are red on the day okay and extremes matter in this case this is what we're looking for with this particular indicator it's not so much about the price action of this indicator the highs and lows and like which direction it's really we're looking for large values in this indicator to tip us off to what's happening and what kind of day we might be having so right so a ratio of greater than three to one is what I think is the potential of trend okay it doesn't mean we're going to get a trend day it just means okay now a trend day is on the table like now we're seeing something where we have participation in the market okay so a ratio of less than two it's really a likelihood of chop range or like a rest day right and so so to me this is the most powerful of the three indicators but it's the slowest to move which means that when we do get those types of reversals uh this one's going to be changing the slowest but when we look at it it is the most powerful of the three and so we'll go over the other two and the other two have different attributes that make them useful but let's just talk about the V ratio first really quick so here we have a chart of the cu's 15minute candles we can see I think there's like five days on this chart and you can see the vold ratio histogram on the bottom and the day that we have highlighted the most recent day just notice how the V histogram is different than all the other days right and then in this particular day it was a ratio of 6 to1 which is absolutely strong like that's the kind of reading that we're going to see on these kinds of days and look this is a very particular type of trend day this is a gap and go pattern right you can see the Gap in the chart we opened up and we opened up with a vold ratio that was very strong from the get-go and it's sustained and not only sustained but built throughout the rest of the day there are other types of days where we can use the V ratio that aren't necessarily going to look exactly like this and we'll go over those in later editions of this series but today we're just going to focus on these really really powerful extreme signals that we get and a lot of times they're on Gap Ando type of situations and a lot of times people will ask me like when do I execute this like how early can I tell that this might be a trend day and of course we can never tell exactly because everything in trading is uh about probabilities and risk reward right so we just want to put ourselves in a situation where we have high probability high risk reward or one of those things is tremendous right so for me a lot of the times like on a day like this you can in the first 15 minutes identify that there's probably a high probability of a trend day now at 11 clock you have way more information so it doesn't mean that you have to do this during the first 15 minutes and that's the beauty of these Trend days is they should close at the highs or close at the lows so the longer these internals are giving you these types of signals the more confirmation that you're getting and a lot of times and you can see in this particular day here there's an afternoon trade right so you might not do anything all morning and then you might see the Market goes sideways all afternoon and then you might actually get in at two 2 o'clock for a run into the close because now you have all this information that the internals have been extremely strong all day and building and holding up and all these kinds of things okay so Garrett I'd like to jump in here at this point uh to show how we might have turned your observations about the VA ratio on that day which is back in April 20120 into a high probability zero DTE trade now back in 20 20 as you guys might know the cu's only had Friday options expiration and so there was no zero DTE option available on Monday April 6 2020 for the q's but remember the ndx index is comprised of the 100 stocks which is the exact same basket of stocks contained in the ETF known as the cues and so if you get a signal for the cues you're going to get that exact same signal for the ndx index itself so basically we can take any signal for the cu's and use ndx index options to trade that signal which is pretty important because the ndx index is the only way we could have traded the signal that day because the q's only had a Friday expiration back in that period of time and this signal the vold holding at an extremely high level up at six that signal happened to occur on a Monday and so Garrett you mentioned earlier that you'd probably be in a position at the latest say to be able to act on a signal by 11:00 a.m. so let's say that on that day we pulled up an options chain of the ndx expiring that very same day on April 6th 2020 and as you can see at the moment at that moment the ndx index was trading at 78 7352 and so we navigated up to the call option with the Delta closest to 30 Deltas which you've mentioned is your kind of sweet spot Delta for trading zero DT options and you notice that the 30 Delta option had a strike price of 7930 and so we went ahead and bought that for the price of $19.50 and just to make sure that we're all in the same wavelength when you buy an index option you have to multiply the price you paid for it by 100 because index options pay off at a rate of $100 per point above the strike price of the option and so in order to make this trade you'd have to pay $1,950 in cash for that option now if we move to the end of the day the ndx index continued to Rally in lock step with the q's of course and ended up closing at 88166 and so remember these are zero DTE options and so those options expire at the close which then allows us to assign a final value to an option and so the way that you value a call option on an index is that you take the index's closing price price on that day the day the option expires and subtract from it the strike price of the call option you bought which in this case is the 7930 and so the result of that subtraction is 15166 and then remember the payoffs $100 per point so that payoff on the call option is 15,167 from which you subtract the original cost which was only 1950 which means that your final profit on the trade would have been 13,200 $6 which is an incredible 677 per return on risk in a single day so that's a pretty good example of how powerful the combination of a strong Market internal and intelligent options trading can be okay so Garrett can you give us a few more examples of the impact of a high VA reading on the market great yeah so here we have another 15minute candle chart same thing right and that's I mean this is 10 this is 10 or greater bold ratio so this is a beautiful thing I mean you don't you don't see this every day which is what I like about these like these types of days really stand out they grab your attention which is what we want when we put on something like a zero DTE option right because it's not something we're just GNA do every day so and by the way later at the end of this video we're going to show you how to bring the V ratio up and see these different internals that we're going through on your platform um because they are uh they are indexes that will get will give you the tickers and all that kind of stuff Garrett how often by the way uh do you think you'll get an event like this six times vold or 10 times vold is that uh going to be you know like a twice a year kind of a thing or is it more like once a month it's it's much it's it's definitely way more than twice a year it's also Market dependent like when we were going through the covid crash I mean we were seeing this stuff every day uh but in a in a normal kind of dull Market you're going to see like once a month you're going to get something like this I see so this is something you want to be aware of because it's a unique opportunity it's not something that's going to happen every other day yeah and I mean to me like this kind of trade can make your month right if you really trade it well it can make your month and and I'm talking about you know these specific types of trend days right I'm not talking about any Trend day but these specific ones that we're showing once a month and and they can really make your month so here's a here's a down day and this was an actual CPI report we gap down and we open with negative five breath and it held all day and you can even see on this chart how there was an afternoon opportunity that was pretty great as we got like a shallow pullback and then continuation into the close but you can see how all of these charts look the same in terms of the V ratio right they just really really stand out and if you kind of look left on this chart a little bit you can notice another day where we had pretty good breath right and and we did it's not as powerful of a day as we just showed you but we did open at the lows and close at the highs right so Seth just asked like how often does this happen and this this happened twice in one week right so sometimes like some markets do this a lot and then that's when you're really going to want to be keyed in on it and some markets you know might be dull for a while just like anything um and then if we look left again we can actually see a different type of trend day where the V ratio built all day right and I like to call this the bread Crescendo and this is something again we'll go over this in a future edition of this series because we're going to talk about other types of days um but I just wanted to point out how we're reading the vold like not just on that extreme day that we showed you on the right but on all of these kinds of days all right so let's talk about the advanced decline line so that's the second Market internal that we're going to cover the advanced decline line is the difference between the number of up stocks and the number of down stocks okay so this differs from the V ratio in two ways one it's not taking volume into account and it's also not a ratio in this case we're subtracting okay so we're just finding how many more up stocks are there than down stocks on the day or how many more down stocks are there than up stocks on the day and in this indicator patterns do really matter because this is a really Dynamic indicator it's faster to turn than the Vol ratio which we just went over and you're going to want to see patterns in this indicator and we'll point out some patterns right now so one of the best patterns in this indicator and this is the pattern that will show up on all of these types of Gap and go patterns that we're going through right now is when the advanced decline gets pinned to positive 2000 or negative 2000 so in this example it's pinned to positive 2,000 all day and again what I love about this is you can see the Stark difference of the advanced decline on this day versus all those other days on the chart okay so when we when the Market opens we might see extreme readings and the Advanced Decline and we're going to be able to track that advanced decline to make sure that it holds there because if the Market opens at a positive 2,000 reading and then the advanced decline just Tanks off the open and goes back to zero that's not what we want to see right that's very different than this so when we're assessing the data throughout the day we're looking to see this Advanced decline line hold and pinned to 2000 and so to s point about you know putting on this option trade at 11 that is so much time to be able to see that the advanced decline is pinning so this that's an actual conservative approach to this type of strategy right you can you can do it much earlier than that you can you can do it much earlier um but again like you can see even on this chart that we kind of had a little bit of a sideways action midday and then it ripped you know the second half of the day so sometimes if you do spot something like that even in the price action you can see that it's rests for a little bit but the advanced decline is still pinning you might actually find a really great risk reward spot later in the day to get something into the close so here's another one this is a down day so this is the same day that we looked at for the vold ratio and we can see here that the advanced decline is pinning to negative 2,000 so imagine you're trading this day and you see that V ratio at neg five or six you know whatever it was before and and you see the advanced decline as pinning at negative -2000 that's just going to give you a lot more confidence to put this kind of trade on and hold it and and trade it well and trade it correctly okay so Garrett I wanted to jump in here at this point to demonstrate that these signals not only work on bullish days but they work pretty much equally well on bearish days like this example that you just shared with us when the advanced decline line was holding below 2500 which is a very very bearish reading on September 13 2022 that was that price chart we were just looking at and so again we'll go ahead and start at 11:00 a.m. after the advanced decline line had held at this extremely weak reading for the first 90 minutes of the cash Market that morning and so we pulled up again an ndx index options chain expiring that day but this time we turned to the put side of the options chain and we again find the put option with the strike price closest to Garrett's sweet spot 30 Deltas which is the 12,150 put option and we go ahead and buy one of those for 2565 which of course means we paid $2,565 for it as we explained earlier and as you just saw the advanced decline line held below 2500 pretty much the whole day and so the index continued to sell off that day ultimately closing at 12,33 62 and so with put options of course you flip the process on valuing expired options and you take the put option strike price and subtract from it the closing price of the index and as you can see subtracting the closing price from the 12150 strike price resulted in the closing price being 116.3 points below the put strike price resulting in a final value for the put option of 11638 which when compared to the puts cost of 2565 yields a one-day profit of 9,073 more than triple what we paid for it in a single day uh so gett do you have any other examples of the advanced decline line and its impact on the market yeah so actually this is the same slide that we just looked at but we're going to look left and we're going to see this prior day here right we talked about that breath Crescendo that I talked about well it happens in the advanced decline as well right and this is actually my favorite indicator for identifying this type of day we can see the advanced decline started build right away and trended higher all day and we did get a day that opened at the lows and closed at the highs again not as strong as this other Trend day but that's a different type of trend day that we can identify and we will go over this kind of day again later in the series so let's talk about the tick so this is the third Market internal this is my favorite this is the fastest one to turn it's going to give you a lot of information about what's happening right now and there are patterns that we can look at to identify what kind of day we are having so the tick is the difference between the number of stocks that are currently trading higher versus the number of stocks that are currently trading lower okay so if there are a thousand stocks trading on an uptick right and there are 1,500 stocks trading on a downtick right now that tick indicator is going to give you a reading of Nega 500 okay so the biggest thing that we're going to look for for these Trend days is when the tick is holding above or below zero for the entire day and we'll look at these patterns in a second um and then you can also look at and this is less important but it is a nice piece if you want to look at it this way we can look at the cumulative tick line right and what that does is it accumulates The Tick values throughout the day so it just keeps adding The Tick values that that we see at the close of every bar throughout the day and so if the The Tick is holding above zero we should see that cumulative tick line trending higher and if that tick is holding generally below zero we'll see that cumulative tick line trending lower okay so another thing we can look at are consistent extreme ticks right and so a positive generally a positive thousand or negative thousand ticks are going to be extreme okay we might get on a quiet day we might get only one or two of those kinds of ticks but on a trend day or in a high volatility Market we're going to get a lot of positive thousand maybe even positive 1200 1500 even sometimes and in really extreme situations and so on a trend day you're going to see a lot of those on one side of the market and of course the tick holding above or below zero so here we have a day a downtrend day right on this on these five minute candles we have three days here lined up but the most recent day is a downtrend day just notice the tick is very different than on those two prior days those two prior days The Tick hovered above and below the zero line which is that white line just indicating that really neither buyers or sellers were in control that day and price is just going to generally oscillate around it's probably going to respect levels and tradeing a range and and things like this but it's very different on this trend day it's holding below zero and look it can Wick above zero that's fine we're not saying that it can't go above zero we just mean generally when we look at it the bodies of the candles most of the tick is populating below that zero line and you can see because of that the cumulative tick on the bottom is trending lower the whole day and that's what will happen to the cumulative tick when the tick is holding below zero okay so G let me jump in at this point so we can take a look at another way that you can trade a market internal like the tick in this case when it's consist consistently holding below zero and so on this day which the the chart we're looking at right now is February 21st 2023 let's say that again we pull up an options chain expiring that same day the zero DT options chain for ndx and just like we did before with the NX index trading at 121 15885 at 11: a.m. and with the tick holding consistently below zero all morning we go ahead and buy the 30 Delta option the 12,000 100 put for in this case 2440 just like in the previous cases but this time we simultaneously sell the 12,060 put which is 50 points below the 12,110 and for that option we are paid a price of $10.70 now I say we were paid that price because we sold that option so now we are the ones who are receiving cash from the trader who bought that put option from us and so when we do that buying a put option higher up on the options chain and selling a put option lower down on that same chain when we do that what we're entering into is what to options Traders is known as a put debit spread and it's an outstanding strategy for taking advantage of your directional bias on a zero DTE trade like this now why would we employ a put debit spread well let's turn to the cash flow of the trade to get the answer you see when we entered into this put debit spread we paid 2440 for the long put at 12110 which cost us $2,440 but then we simultaneously received $1,070 for selling the 2060 put 50 points below that for 1070 resulting in a net cost of $1,370 far less risk than just buying the 12,110 put outright we nearly cut the cost in half by doing that and so when we moveed to the end of that day where the tick lingered below the zero line almost the entire day as G just showed you the index ended up closing down at 12,630 and so again we can assign a final value to the options because these are zero DT options and so first off we value the 12,110 put which as you can see from the calculation is worth 4970 being 49.7 points in the money at the close but what's interesting is that the option we were short 50 points below the 12,110 long put that 12,060 put that option that we sold that one actually expires with no value because the index closed in this case very slightly above its strike price and so it doesn't have to pay out anything because puts only pay out if the closing price of the stock is below the put strike price so that put simply expires worthless meaning that when you subtract out the original cost of the debit spread in the first place the final trade profit is $3,600 which is a 262 return in a day now before Garrett gets back to showing you how other days with extraordinary ticks played out I want to share with you a little bit more information about using debit spreads you see debit spreads can be on the put side for bearish play as we just showed you but they can also be used on the call side as a call debit spread it's just reversed in that case with the long call being lower on the option chain than the short call but the result is the same the trade has a lower cost because you're buying a call and then kind of getting a discount on that call by selling a higher up call further from the money and that of course means that whether you're buying a put debit spread instead of just buying an outright put or buying a call debit spread and just instead of just buying an outright call in either case it's going to be cheaper to buy the debit spread and that can make your Returns on the trade better in many cases and in any event reduces the absolute dollar risk of the trade however you also need to realize that with the debit spread that cheaper price comes along with a price and that price is a reduction in the profit potential of the trade because as soon as the closing price exceeds the location of the short put in the case of a put debit spread or the short call in the case of the call debit spread the trade is effectively capped at how much profit it can make because once the short putut or the short call are exceeded then you start making payouts under that short option and the payouts you're making are being offset dollar for dooll with the payouts you're receiving from owning the long option resulting in your gain being prevented from getting any larger in other words the gain's kind of Frozen at that point but that said if you locate the short option far enough away from the long option you bought you can enjoy a great deal of profit on much less risk with a debit spread okay Garrett why don't you finish up providing us with some other examples of extreme tick days and how the market normally reacts to that metric all right so here's an intraday chart with two minute candles and you can see very clearly just how how well the tick held below zero and because of that the cumulative tick just tanks all day right and this is a this is a very very clean example okay one of the reasons I love the idea of doing doing the spreads on this kind of trade is because there's zero DT options right so there's going to be a lot of Decay and we know that they expire at the end of the day and we know we want to hold till the close right right the the place that I get messed up with buying spreads a lot of the time is when I mtime it right I buy spreads two months out and then the move happens that day right right and then I'm like I wish I had bought nakeds right but this you have a very clearly defined window of time with this type of trade and even if I'm trading this with stock I'm telling myself as part of my process I'm holding some until close so that's just part of trading a trend day I see here's an uptrend day with extremely strong ticks especially in the morning right and then we get a little bit of sideways action in the afternoon and then a really strong close but that is so blatant to me like when I see the tick like that it can barely trade below zero I mean that because this doesn't happen every single day when it does I get excited because it just really stands out which is what I love about this all right so here's a downtrend day and again we can see the ticks holding below zero but what I want you to focus on are those spots where the tick does stretch above zero like those High tick moments in this low tick regime and we have one outline there for you with the yellow curve right it shows that high tick and when when that happens in a regime when the tick can barely hold above zero that gives us an opportunity to see when perhaps there's an instance when this is all the buyers are going to be able to get done right so this is just a little trick I have because when trading zero DT options I really want to time it well like I don't want to mess around I really want to get good entries and this is just a trick that helps me get good ENT is you're basically fading those upticks those extreme High ticks in a low tick regime right so we know that it's holding below zero we know that price is weak right we're looking at the price action it sold off in the morning and now it's going sideways right a very weak bounce and we finally kind of get that tick capitulation and then it comes right back down below zero and so we get to see okay well you know what like that already happened that's sort of a spot where we got to see what the buyers were able to do and now it might be a lot safer for me to time this trade for a move into the close and here are two more examples on an uptrend day of the same kind of action right just pointing out those relative low ticks in a high tick regime and you can see that those are just very good pullbacks to key in on right so I just have I actually have alerts for this when the tick does this um it just flashes me an alert and I'm able to kind of key in on the price action and see like is this really a spot where I might want to start doing some business so Garrett are you going to tend to enter like right after the pullback fails and begins to bounce again or will you act sort of during the pullback what's your general yeah so there's a few ways to do it and a lot of times on these days especially on the short side I'll actually act on that tick because I'm I'm so confident that we're having a day where the vold is Extreme the the advanced decline is pinned the tick has been holding zero all day right I have all these things working in my favor so now I'm just looking for those adverse ticks to kind of give me a safer entry so I might get some when I see that tick right I'm looking at a one minute chart right I might just wait for the next bar right but the other thing I'll do is I'll see what I want to ask myself is when does The Tick come back in this case back above zero right so we get that we get that relatively deep tick that gives us the alert like I might be buying some there but I want to see the tick actually come back and like reclaim zero like pretty quickly right because we don't want the tick to then start holding below zero because that would be a change of character and that will happen sometimes right but that's how you know that the Market's changing and that we actually might get like a deeper pull let's just review the three because we went over these pretty quickly and and it's good to look at them all together because there really is a Synergy between these three on these days right so we have the V ratio right which is the net volume of the up stocks divided by the net volume of the down stocks okay and if the down stocks if the net volume of the down stocks is higher than the net volume of the up stocks I just flip it right then it's the net volume of the down stocks divided by the net volume of the up Sox so it's always a ratio of one: one 2: one 3: one of whichever one is on top right and that's that's how I look at it um the advanced decline line which you can just bring up on any platform the total number of stocks that are up on the day minus the total number of stocks that are down on the day and then of course the tick which are the number of stocks that are currently trading on an uptick minus the number of stocks trading on a down tick and and the thing I like to emphasize about these is there's a hierarchy so yeah they all have their own things going on but there kind of is a way that I'll look at these and there's sort of a speed to which each of these reacts to Market changes here's a little pyramid I made to kind of outlines this hierarchy that I'm talking about and I'm just trying to show here that the V ratio is our base right that's the first thing that I'll look at every morning I just want to have that give me a color for the day right is this an extreme breath day is it a neutral day generally what kind of day are we having then I look at the advanced decline to see if this regime that I'm seeing right now in the v ratio is changing or not because if we start to revert right and we start to lose that breath it's going to show up in the advanced decline before it shows up in the v ratio I gave that example earlier where we Gap up an extremely strong breadth and the advanced decline opens at 2,000 but then it immediately sells off at the open and reverts back to zero right so that's an example of something that I don't want to see on a trend day and so that's why we look at the advanced decline kind of next right and then when we're looking at executing like we kind of just described with the tick or we're just trying to confirm these other two then I look at the tick right the tick is much more detailed it's much more reactive it's telling you what's going on right now and so again if there's going to be a big shift in the market often times it first shows up in the tick The Tick will start to change character and you'll really be able to see that if you watch this every day and you start to kind of get used to the action you can bring these up on any platform the V ratio I just want to point out is the only one that you will have to manipulate a little bit in order to get it the way that I look at it so on most platforms they're going to have and these are tickers you put these as symbols into your charts like they're not studies they're not indicators at least not on you know all of the platforms that I look at they're IND indic their indexes right so they're going to be dollar sign V right and that's going to be that's going to be your vold right but it's not the ratio okay what I do is I take the dollar sign uall which is the up volume and the dollar sign Devol and I create that ratio so this is the only one that I manipulate with the code in my platform and I've kind of given you the two equations that I use right here and it's nothing fancier than that it's literally just this this is the only math that's going into this the other two the advanced Decline and the tick are just ready to rock like that's dollar sign add right and and a lot of platforms will also have they'll have the NY and they'll have the NASDAQ they'll have the different exchanges and a lot of the times I'll be looking at the NASDAQ one if I'm trading the NASDAQ trading the q's and stuff like that so dollar sign add is the ncy one I know on thinker swim it's dollar sign add Dash Q for the NASDAQ right it's going to be something slightly different for each platform but most of them have both and then for the tick it's just dollar sign tick right so uh same thing right dash Q for the q's and stuff like that and so what I'd like you to take away from today's video is that zero DTE options trading can be greatly enhanced through the use of Market internals that Garrett has taught us today and trading options to express these trades is an amazing alternative to outright buying shares of expensive stocks where your risk is so much higher and your account size will have to be so much larger to take advantage of the market internals that are just screaming at you to buy or sell as the case may be and if you have a small account you can potentially make serious profit as we just showed you with a pretty minor amount of risk through the use of zero DT options as we just demonstrated you see professional Traders become proficient not just in trading trading equities but they become equally proficient trading options which then opens up a whole universe of trading opportunities with awesome risk reward characteristics on very manageable levels of risk okay so now that we've covered how to trade market internals with zero DTE options I wanted to mention that next week Garrett and I are going to be releasing a new video on exactly how to create an ETF filter to determine if we are at the early stages of a bullish or a bearish trading day and then how to take that information and use it to construct an options trade to exploit the market conditions that we've detected so be on the lookout for next week's video part two of our four-part series on how to use indicators to trade zero DTE options now if you'd like to learn three more option strategies that our prot Traders use including the unique options trick that allows you to make money while you wait to buy stocks or ETFs at the price you want and the options income strategy that allows you to make consistent money whether the market goes up or down or sideways and how to make money on a stock or index trade even if you're wrong on the direction then click the link that's appearing right now at the top right hand corner of your screen that will open up the free Workshop registration page in a new window so don't worry you won't lose this video or you can register Direct direct ly for free at options.com

Channel: SMB Capital

Views: 101,853

Keywords: stock market, day trading, smb capital, trading, investing, markets, wall street, stock trading, options trading, options income, economics, finance, 0DTE options, options 0dte, call options, short options

Id: CeEksKNSGMQ

Length: 43min 38sec (2618 seconds)

Published: Sat Jan 27 2024