0DTE options craze

J

Jdesey

Just google anything about zero days to expiration options and you’ll see it’s a real big thing right now. The volume has grown dramatically, but is this just gambling?

I have tried my share of 0DTE recently and basically I’ve broken even. To me it just feels like gambling. you have extreme time decay as you are trading the same day as an option expires. I’ve had many of these expire at zero, they move very very fast.

is this a serious strategy with the zero DTE options or is this just folks trying to take a little bit of money and make a bunch?
 
Its definitely gambling but even in gambling there are some that are better than others. I first heard about the ODTE trades on r/WSB back in 2021. It is the quickest way to YOLO yourself to massive losses. Then you can post your loss porn on r/WSB.
 
Research have shown that 70-80% of the trades is institutional of various kind and done by professionals working in finance.

Under capitalized retail traders looking for leverage? that is nothing new, have been a theme for 30 years.
 
Jdesey said:
Just google anything about zero days to expiration options and you’ll see it’s a real big thing right now. The volume has grown dramatically, but is this just gambling?

I have tried my share of 0DTE recently and basically I’ve broken even. To me it just feels like gambling. you have extreme time decay as you are trading the same day as an option expires. I’ve had many of these expire at zero, they move very very fast.

is this a serious strategy with the zero DTE options or is this just folks trying to take a little bit of money and make a bunch?
More...

everything is gambling when you don’t know what you are doing. And even when you do know, there’s still randomness.
 
For many it is absolutely gambling. For others 0DTE is simply another tool available to manage profitable strategies in a more granular way.
 
Jdesey said:
Just google anything about zero days to expiration options and you’ll see it’s a real big thing right now. The volume has grown dramatically, but is this just gambling?

I have tried my share of 0DTE recently and basically I’ve broken even. To me it just feels like gambling. you have extreme time decay as you are trading the same day as an option expires. I’ve had many of these expire at zero, they move very very fast.

is this a serious strategy with the zero DTE options or is this just folks trying to take a little bit of money and make a bunch?
More...


If you just spend a few minutes a day trading ODTE, then that is gambling.


If you sweat blood by spending
> 12 hours a day practising / trading ODTE (for many many years),
then that is not gambling.
 
The definition is not premised on the outcome, many things in life are completely uncertain yet don't constitute gambling. It depends on how you arrive at decision making about uncertain outcomes. If the underlying rational of a decion is based on a logically sound approach other than hope, prayer and wishful thinking then that would preclude gambling.

SunTrader said:
Anything after all is a gamble by definition, if the outcome is uncertain.
More...
 
RTN-vega on longer dated stuff is difficult as you're naturally short excess fronts over backs; you're compensated by the switch edge (D1/D2) but again, you're net short a shtload of contracts.

0DTE is great bc you can get long in 1-3 day index against short vol in backs and you can easily expense the -edge in the switch to get neutral $-gamma or net long.

I am always a buyer of 0DTE in index and short 0DTE on single names on Thursday close/Friday morning.


(Switch) = vol edge x tenor
(RTN) = root time neutral Vega
 
You must log in or register to reply here.
Back
Top