Day trading SPX index options. 100% daily ROI possible?

[Romeg]

Those values should be visible on your trading screen as you view the option chain. I use TastyWorks which was developed by the same team that developed ThinkorSwim, the TDA platform, only it is much more user friendly than ToS. If your platform does not display Open Interest, POP, and Probability of ITM along with the Greeks (which I do NOT use) then consider switching brokers. The Profit % is derived by dividing the projected profit, or premium to be collected, by the Buying Power required to execute the trade.

For example, if the trade is going to generate $1.50 per contract, (that is $150 in premium that will go into your account) and the Buying Power required to execute the trade is $450 then that is 150 divided by 450 or 33%. CAUTION: If you are doing trades expecting to make 33% each time, you are going to be disappointed because the market just won't allow you to do that very often. Your strikes are too close together and you will wind up adjusting one or both sides of it or you will have to exit early. So, instead of looking to take 1/3 in profits every trade, go for a more modest 15% to 20%, between 1/6th and 1/5th of the Buying Power required as your profit goal. But that is just one single parameter.

And remember, your funds are only tied up for six and one half hours, even if you enter the trade at the opening bell. If your trade is successful then all those funds, PLUS the premium you will collect on the trade, will be available to you in the next session. A 15% return in a single day ain't shabby and your probability of winning will go up considerably, from around 60% to somewhere around 80%; a 33% improvement in the probability of winning. It is not a linear jump.

 

[Romeg]

Romeg, thanks for the details.
"I want Probability of ITM to be in the 0% to 2% range, knowing it will move throughout the day. I want POP to be between 76% and 90%. I want my ROI for the trade to be at least 16% for the day. "

However SPX option chains didn't show anything even close to those guidelines this morning.
Would appreciate an example of such a trade. THX.

Romeg, thanks for the details.
"I want Probability of ITM to be in the 0% to 2% range, knowing it will move throughout the day. I want POP to be between 76% and 90%. I want my ROI for the trade to be at least 16% for the day. "

However SPX option chains didn't show anything even close to those guidelines this morning.
Would appreciate an example of such a trade. THX.

 

[traction]

Those values should be visible on your trading screen as you view the option chain. I use TastyWorks which was developed by the same team that developed ThinkorSwim, the TDA platform, only it is much more user friendly than ToS. If your platform does not display Open Interest, POP, and Probability of ITM along with the Greeks (which I do NOT use) then consider switching brokers. The Profit % is derived by dividing the projected profit, or premium to be collected, by the Buying Power required to execute the trade.

For example, if the trade is going to generate $1.50 per contract, (that is $150 in premium that will go into your account) and the Buying Power required to execute the trade is $450 then that is 150 divided by 450 or 33%. CAUTION: If you are doing trades expecting to make 33% each time, you are going to be disappointed because the market just won't allow you to do that very often. Your strikes are too close together and you will wind up adjusting one or both sides of it or you will have to exit early. So, instead of looking to take 1/3 in profits every trade, go for a more modest 15% to 20%, between 1/6th and 1/5th of the Buying Power required as your profit goal. But that is just one single parameter.

And remember, your funds are only tied up for six and one half hours, even if you enter the trade at the opening bell. If your trade is successful then all those funds, PLUS the premium you will collect on the trade, will be available to you in the next session. A 15% return in a single day ain't shabby and your probability of winning will go up considerably, from around 60% to somewhere around 80%; a 33% improvement in the probability of winning. It is not a linear jump.

Thanks for explaining this.

Can you give an example of one of your trades with the actual numbers, I want to make sure I follow along correctly.

Today with SPX at 2920 I put on 0DTE:
-2880 / +2870
-2945 / +2955

Collected $55

 

[Romeg]

This is the screen shot of the close. BTW, I violated one of my own rules and made an unnecessary and, frankly, kinda dumb, adjustment. Had I left it alone I'd have netted more than $1500.
What you see are Five Iron Condors in each of my three accounts for a total of 15 contracts. My profit for the day was $1375.

Calls on the left, Puts on the right Strike Prices increment upward as you move down the screen so if you are using any standard charting software you have to invert your thinking as ALL of them show increasing prices as you move UP the chart.

The column headers are Open Interest, Probability ITM, Bid, Ask, Striked, Bid, Ask Probability ITM and Open Interest. I should have made the screen shot a skosh taller. My apologies.

What time of day did you enter your trade?

Your strikes are fairly close to mine. I entered at around 10:30 with about the same strikes that I ended the day but, at about 1:00 I second-guessed myself and made that adjustment. I reversed it about an hour later but it cost me about $20, net, per contract and ratcheted up my PDT counter to 2, something I was wanting to avoid.

AS ALWAYS: THIS IS NOT TO BE CONSTRUED AS INVESTMENT OR TRADING ADVICE. IT IS FOR ILLUSTRATION, EDUCATION AND DISCUSSION PURPOSES ONLY. I AM NOT A QUALIFIED INVESTMENT ADVISOR. DO NOT TRADE OPTIONS UNLESS YOU CAN AFFORD AND ARE PREPARED TO LOSE YOUR ENTIRE INVESTMENT.

 

[traction]

What time of day did you enter your trade?

Thanks I think Im following.

Yes I made my trade too late into the afternoon hence only worth 55 cents. By the numbers yours was worth $3.00 each?

Do you find that the open markets generally follows what the futures were trending?

 

[Romeg]

No, about a buck each initially but by dorking around and making stupid, wasteful adjustments, I managed to reduce that by about 20 cents per contract. Since I started following this regimen, EVERY SINGLE ADJUSTMENT I've made has been needless, wasteful and very frustrating. I can't get it through my head that the time I spent BEFORE entering the trade has given me the right numbers, thus far, every single time in the last, now 14 sessions.

The open will sometimes be right with the Futures but I only use the Futures to get a feel for sentiment and depth of market. I don't enter a trade for at least 30 minutes and, more often, 45 minutes to an hour after the open. However, as volatility bleeds off it probably won't jump around as much as when it is in the stratosphere.

You seem to be unsure of something. What's troubling you.

 

[traction]

No, about a buck each initially but by dorking around and making stupid, wasteful adjustments, I managed to reduce that by about 20 cents per contract. Since I started following this regimen, EVERY SINGLE ADJUSTMENT I've made has been needless, wasteful and very frustrating. I can't get it through my head that the time I spent BEFORE entering the trade has given me the right numbers, thus far, every single time in the last, now 14 sessions.

The open will sometimes be right with the Futures but I only use the Futures to get a feel for sentiment and depth of market. I don't enter a trade for at least 30 minutes and, more often, 45 minutes to an hour after the open. However, as volatility bleeds off it probably won't jump around as much as when it is in the stratosphere.

You seem to be unsure of something. What's troubling you.

No I just wanted to make sure I understood your logic. I too was badly burnt by holding overnight so Im looking forward to implementing your strategy.

I use the same platform so hope to follow your success!

 

[Romeg]

I'm not a professional trader. I'm self-taught at TREMENDOUS expense. What success I'm experiencing is the result of having stopped making the mistakes that cost me so dearly since last September when I actually made my first live trade. I started trading this strategy exactly one month ago today, April 8. In 14 consecutive profitable sessions I've made $11,456.37 starting out with about $2300 in each of my accounts, just under $6900. I now have more than $6000 in each of them.

That may be random luck or something else but I'm inclined to believe that it is from having a clear idea of what my plan is before I enter the first trade. However, as I've stated above, I'm still inclined to second-guess myself and that ALWAYS costs me money. I need to work on that Discipline thingy a bit more.

I'm trading full-time but only about three days per week since I only trade expiration days so I now consider this to be my job. Give yourself plenty of time to get comfortable (well, as comfortable as you can be with the prospect of losing all you put into a trade) before taking on more risk with bigger trades or multiple trades spread over multiple accounts and set them up conservatively. As your confidence grows, so will your account balances.

 

[traction]

I'm not a professional trader. I'm self-taught at TREMENDOUS expense. What success I'm experiencing is the result of having stopped making the mistakes that cost me so dearly since last September when I actually made my first live trade. I started trading this strategy exactly one month ago today, April 8. In 14 consecutive profitable sessions I've made $11,456.37 starting out with about $2300 in each of my accounts, just under $6900. I now have more than $6000 in each of them.

That may be random luck or something else but I'm inclined to believe that it is from having a clear idea of what my plan is before I enter the first trade. However, as I've stated above, I'm still inclined to second-guess myself and that ALWAYS costs me money. I need to work on that Discipline thingy a bit more.

I'm trading full-time but only about three days per week since I only trade expiration days so I now consider this to be my job. Give yourself plenty of time to get comfortable (well, as comfortable as you can be with the prospect of losing all you put into a trade) before taking on more risk with bigger trades or multiple trades spread over multiple accounts and set them up conservatively. As your confidence grows, so will your account balances.

Well congrats so far. Lets hope the IV stays high for a while and we can make hay whilst the sun shines.

 

[Marcelino]

Romeg, thanks, but data after closing doesn’t tell much. Can you post a screen shot of the filling prices you got today?

You said you make sure probability of your strikes ending ITM is 0 – 2%. These strikes have less than 2 delta. I can’t see how they can bring you ROI above 16%