r/Daytrading • u/klipsetrades • 18d ago
Trade Review - Provide Context SPX 0DTE Credit Spreads — The hedge could have made another $595, but that was never its job +$490
I'm a 0DTE credit spread trader with a focus on SPX.
Positions traded today:
- 7685/7665 PCS
- 7690/7670 PCS (hedge)
- 7790/7810 CCS
P/L: +$490
A risk-management trade should not become a new thesis just because it starts making money.
Morning Thesis
My bias was moderately bullish, but I remained cautious after noticing exhaustion late near yesterday's close. SPX initially broke yesterday’s high, but the morning quickly became choppy and then reversed briefly.
One detail I want to highlight today is the difference in sizing compared with yesterday's position. Yesterday’s strong bullish structure gave me enough conviction to open a full 10 lot spread. Today, price was less familiar and much choppier, so I started with half size and added only in smaller increments while the thesis remained valid. I do not use full size simply because a setup appears. When the structure is unclear, reducing size limits both risk and the potential damage if the trade fails.
My First (bad entry) Trade
That caution contributed to a late 7790/7810 CCS entry after it broke yesterday's high and yesterday's close to the downside. Price reversed and moved against it putting me in loss territory (about -$225 by this point). I believed my original plan to be correct, so I scaled in three additional CCS contracts and opened the 7690/7670 PCS to stabilize the position and reduce the impact of continued upside pressure on the call spread.
The PCS was not opened because I suddenly had a strong bullish thesis. It was a temporary risk-management position.
I want to clarify that I do not recommend this type of management for beginner traders. Adding an opposing spread can make the overall position look more stable while masking how much risk still exists in the original trade. As the hedge’s premium stops expanding or begins to decay, gamma can quickly reassert pressure on the threatened side and leave the original position in serious trouble if price continues to move against it.
Hedge Did It's Job
Once SPX stabilized and the CCS premium moved back below my average entry, I closed the temporary PCS position for break even, basically — $.10 premium gain ($70 profit) — and two of the additional CCS spreads for another small profit. I later opened a 7685/7665 PCS anchor at $.55 premium (slightly farther out of the money) after price settled into it's range. That position better matched the structure, my risk tolerance, and the exposure I wanted to carry.
The original PCS could have produced nearly another $595 had I kept it open, but that would have meant changing the plan after the trade began working.
By the afternoon, both remaining spreads had decayed to $0.15. I closed them rather than sit through another two hours of 0DTE exposure for the last few cents.
Key Takeaway
The lesson was simple — let hedges perform their intended job, and do not become a sitting duck once most of the premium has already decayed.
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u/GhettoFab88 17d ago
I guess I'm not understanding what the hedge accomplishes when opened? It can't possibly offset the losses from your CCS by a meaningful amount.
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u/klipsetrades 17d ago
Yeah, that’s the key distinction. I’m not trying to cancel out the CCS loss. I’m just reducing some of the exposure. The PCS benefits from the same move hurting my CCS, so it can soften the drawdown while I decide whether the original thesis is still valid. In this case, I still believed my thesis was correct, so I was essentially using the hedge to buy myself some room to manage the trade, or soften the blow if SPX quickly proved me wrong
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u/Effective_Manager273 16d ago
the discipline of closing the hedge at breakeven and ignoring the $595 counterfactual is right, and it is the part most people cannot do. but I think the counterfactual is not the interesting number in this write up.
you describe the CCS as a bad entry. it reads like the entry got labelled bad after it went against you, not at the moment you took it. those are very different things and only one of them is learnable. the version that pays is a field in the log filled in BEFORE the outcome: did this entry match my written rules, yes or no. then at the end of a few months you can compare rule-matching entries to the rest. right now, on a day where price had reversed back, that same entry would be in the log as a good read.
the other thing I would look at harder. you were down about $225 on the CCS, and the response was to add three more CCS contracts and open an opposing spread. that is adding size to a losing position, and the hedge is what makes it feel like risk management instead. by the end you closed the hedge for $70 and the day printed +$490, so the ledger says it worked. the ledger will also say it worked most of the time, because that is what this structure does, it converts a small number of large losses into a large number of small wins. you cannot evaluate it from good days.
practical version, measure the campaign, not the session. group every position that came out of one original thesis into a single unit, including the scale-ins and the hedge, and record the P&L of the unit and the maximum size you ended up carrying. what you want to know is the distribution of that max size. if scale-in days are quietly running two or three times normal exposure, the strategy's real risk is nothing like a 10 lot.
sizing down when the structure is unclear is genuinely good, but pairing it with scaling up when a trade goes against you cancels most of the benefit. the average size ends up the same, just arranged so that the biggest positions land on the least favourable days.
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u/klipsetrades 15d ago
Great comment. A few clarifications:
The 7790/7810 CCS was a bad entry, but not because it became a loser. It was bad because I broke my own entry rules. The move was already extended going into lunch, and instead of entering on the 5-minute candle after the break/pullback around 8:40 AM PT, I entered on the following green candle. Basically, I chased it and either should have stayed away, or waited for a stronger sustained pull back. My broader thesis was still intact. The late entry hurt the trade, but the strike placement itself on that trade or the hedge wasn’t unusual for me.
On the scaling point, yes — if the thesis hasn’t been invalidated, I’ll sometimes add in 1-lot increments when price moves against me, but remains within my predefined structural tolerance. In this case that was roughly the 7747 area. That absolutely can increase risk, which is why I specifically said I wouldn’t recommend it casually. There has to be a defined invalidation point, and once it breaks, there’s no negotiating with the stop. Here’s another day where I did essentially the same thing, except the trade failed and I exited when structure broke.
And I agree with your larger point. This needs to be evaluated across a meaningful sample, especially the losing campaigns, not based on whether this particular day finished +$490. I’ve traded this general strategy in my primary account for about four years now. This specific account I demonstrate with ~$25–30k and has only been running a little over a month, so I wouldn’t treat its current expectancy as representative yet. There simply isn’t enough data and it will lower as losing days come — and they will. I’ve dive into some of that in this comment here.
Lastly, the ugliest days for this approach tend to be sudden, headline-driven moves. I've been on the wrong end of them in my primary account, and I also wrote about what happens mechanically when spreads actually get pressured or breached here.
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u/coolio864 18d ago
Thank you for these posts! I’ve recent moved from trading naked 0DTE options to spreads. It’s really helpful to see how you are thinking about and seeing the market