r/options
Papakong88 NDX 0DTE - 06/05/26
Trader shares a detailed log of a losing NDX 0DTE put spread trade, highlighting a revised exit strategy that limited losses compared to max potential loss.
- The trader incurred a realized loss on the NDX position, indicating short-term downward pressure or failed hedging attempts.
- The need for active management and early exit suggests high volatility and risk in current market conditions.
Today is the first time that I used my revised exit plan.
The exit plan is to prepare for exit when the OTM of the short strike is about 80 and exit when it is about 50.
Here is what happened today. All times are CT.
8:30: holding 29650/29550 PS sold the previous day.
8:38: sold 29250/29150.
10:00; NDX=29754, prepare to exit the 29650.
10:25: BTC 29650 PS for 33.50.
1:05: NDX= 29330. Prepare to exit the 29250.
1:27: BTC 29250 for 50.
3:00: NDX close = 28957.
Total loss = 83.50. Loss = max loss = 200 if no exit.
ridiculous sell off today, better tell everyone not to run this strategy as it is very dangerous as moves in NDX are massive
The strategy produces 100% of income in 88 days.
This is the first loss this year or after 100 trading days.
It will take 25 days to recover the loss.
It will be manageable.
how will you make it back in 25 days? do you take in $3.2 each day .. i assumed $100 each sat
For each 30K in capital, I can sell a set of ICs consisting of 1 25HTE IC, 1 0DTE IC and 1 junk IC for a total of 3.40 per day.
I lost 83.50 per set which can be recovered in 25 days at 3.40 per day.
I varied my risk capital allocation when I changed my exit plan.
Now I have one third each in 25HTE, 0DTE and junk.
For each 30 K, I can generate 340 per day.
I lost 8350 per 30K yesterday. Therefore it will take 25 days (5 weeks) to recover.
Didn't you mention in a separate thread you are opening the call and put separately because they're easier to open / close with better spreads? Can you still use just 10k of buying power for both side or are you putting some of your spreads on margin/buying power since only one side can loose and you can always insure the loosing side with 10k?
I place the PS and CS orders separately because it is easier to make adjustments.
This will require 2 X BP.
However, when the orders are complete, the system will pair them as an IC and release 1 BP.
Thank you for the info! I'll have to see if IBKR makes this adjustment as well.
I was wondering how Friday went for you. Good call.
I am producing 1.30 from 25HTE, 1.30 from 0DTE and 0.80 from junk totaling 3.40 daily.
I can add 10K of capital to accelerate the recovery time or to reduce the risk.
I can reduce the risk by selling 1.00 from 25HTE, 1.00 from 0DTE and double the junks sold for 0.70 each. This would produce the same 3.40 but the lower premium means the OTM will increase.
Hey Papakong, with the recent multiple day drawdowns, how to do you know when should you enter a trade on that day or not?
Appreciate how do you scan for your setup.
I believe EM reflects the current risk.
The overnight EM is high now - today’s EM is more than 500. It will decrease as time goes on. I think an EM of 180 to 200 at 10 am CT will indicate a quiet market.
I will not sell when EM is below 120, because the distance to exit is getting smaller.
A 3X EM strike will usually get 1.50 to 2.50 in premium. I sell my PS for less than 1.20. Therefore, determine your minimum EM (or minimum OTM) and acceptable rate of return and you will be ok.
(Note a fifty cent PS will return 125% in a year.)
Offset your strike by 1, pay a bit more could have cut your loss in half there.