0DTE Scalper

UK traders have limited domestic 0DTE options (FTSE weeklies on Fridays only). However, you can access US 0DTE options (SPX, SPY, QQQ - which have daily expirations) through brokers like Interactive Brokers. US markets are open 14:30-21:00 GMT.

You can start with relatively small amounts since 0DTE options are cheap in absolute terms. However, you need enough to survive multiple total losses. If risking 1% per trade and wanting to survive 20 losing trades, you'd need 20x your typical trade size. A practical minimum might be £2,000-5,000.

0DTE options have extremely high gamma, meaning their delta changes rapidly with any price movement. A 10-point move in the underlying can cause an ATM option to gain or lose 50%+ of its value. This extreme sensitivity is what makes 0DTE both exciting and dangerous.

No. 0DTE options are the most difficult and risky form of options trading. Beginners should learn with longer-dated options (30-60 DTE) where mistakes are more forgiving. Once you're consistently profitable with regular options, you can consider 0DTE with very small positions.

If it's out of the money (OTM), it expires worthless and you lose 100%. If it's in the money (ITM), it will either be exercised (American-style) or cash-settled (European-style like SPX). For American-style options like SPY, you may be assigned stock, so it's usually better to close positions before expiration.

Expected Move = Price × IV × √(Hours/8760). For example, if SPX is at 4,500, IV is 15%, and 4 hours remain: 4,500 × 0.15 × √(4/8760) = ~14 points. Place short strikes beyond this for credit spreads.

Take profits at 50% of max credit received. Don't try to capture the last 50% - theta accelerates but so does gamma risk. At 50% profit, the risk/reward of holding becomes unfavorable. Close and move on.

Close the threatened side immediately if the short strike is breached or nearly breached. You can let the other side continue to decay or close it as well. Don't wait hoping for reversal - gamma is against you.

SPX is cash-settled (European-style) with no assignment risk. SPY is physically settled (American-style) with assignment risk if ITM. SPX has larger notional size (~10x SPY) but can trade fewer contracts. SPX is generally preferred for 0DTE due to no assignment risk.

Good days for credit spreads: range-bound price action, no major catalysts remaining, VIX not spiking, midday (range established). Avoid: trending days, pre-major announcement, high VIX, early morning volatility. If unsure, sit out.

When dealers are short gamma (sold options), they must buy as price rises and sell as price falls to stay delta-neutral, amplifying moves. When long gamma, they do the opposite, dampening moves. Large 0DTE volumes often create short gamma dealer positions, contributing to volatile intraday swings.

Hedge when delta deviates significantly from neutral (e.g., ±0.20). Too frequent hedging incurs transaction costs; too infrequent misses gamma profits. The optimal frequency depends on realized volatility and transaction costs. Simulate different thresholds to find the best balance.

Breakeven RV = IV × √(fraction of day remaining). If IV is 20% and 4 hours remain out of 6.5 trading hours, breakeven RV ≈ 20% × √(4/6.5) ≈ 15.7% annualized. The market must move this much for gamma gains to offset theta losses.

Options: 1) Use free delayed data for paper trading forward-testing, 2) Partner with academic institutions that have data access, 3) Use option pricing models to reconstruct approximate prices from underlying data, 4) Some brokers provide limited historical data. All approaches have limitations.

Stop if: consistently negative expectancy over 50+ trades, emotional impact affecting other trading, time commitment unsustainable, drawdowns impacting core portfolio, or market dynamics change (e.g., 0DTE liquidity dries up). Regular review is essential.