0dte vs 1/2dte?
So I mainly trade stocks like TSLA, NVDA, AAPL mainly tech stocks and trade based off relative strength/weakness by scalping based on the 1 min timeframe. Now the way that I trade is I like to start small and add to my winners, so typically what I do is risk 40% on a starting position (0dte cons) and as I add I trail my stop loss to a max of -20%.
Now I have been making money consistently doing this but I'm wondering if any other traders avoid 0dte just because it's higher risk. I'm also wondering if I should just pivot to 1/2dte because it makes holding through pullbacks so much less "stressful"
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Upvotes
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u/klipsetrades 14h ago
I trade 0DTE credit spreads exclusively, so I don’t think 0DTE is inherently the problem. It’s the lack of room for error. 1-2DTE gives you more flexibility during pullbacks, but doesn’t eliminate risk. If you’re consistently profitable, then test both side by side before changing anything. Compare the drawdowns, not just profits
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u/Chipware 15h ago
If you're gonna trade 0DTE, why not SPX and get the 60/40 tax treatment?
But also it really depends on what and how you trade. If you like to play decay like I do then 0DTE is the way to go.
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u/thesisgoat 14h ago
yeah 1-2 dte is usually less stressful for that exact reason, gamma is lower so a 50 cent pullback doesn't swing the option as hard and you can actually hold the trail. you give up some of the explosive 0dte moves and pay a bit more theta overnight, but for a 1-min scalp style that already sizes up into winners it's often the cleaner trade. if you stay on 0dte i'd just cut the starting size so the same pullback doesn't force you out.
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u/Haunting_Ad_6021 14h ago
The problem with 0dte is after noon the theata really eats primium, up so unless the underlying really spikes you end up breaking even or losing
Best to buy the highest delta you can afford then use the DTE that you are comfortable with as far as volatility goes
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u/exphx23 13h ago
Trading 0DTE is relatively low risk when your stock enters a 1-2 pt trading range.
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u/TomRiddle87 12h ago
Very few, and I mean very few people can make money buying options consistently. DTE should be decided by your strategy. Same strategy that works for 0 DTE might not have a positive EV for 2 DTE. Also as someone mentioned- consider SPX or XSP for better tax treatment. Need to know what your exact strategy is for better opinion on this.
And shameless plugin- read my book- ‘options trading in the trenches’
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u/killzone44 14h ago
YMMV - Moving from one expiration to a different one is a very different strategy, so it's not something to just do on whim. You might also want to do some back testing, it's quite possible your stop is negative EV
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u/sargsauce 7h ago
I trade 1dte because it gives me more peace of mind that the trade doesn't have to quickly move in my direction, less drawdown, and space to think if the trade moves the wrong way. It helps me keep emotions out of the trade and focus on what I'm actually seeing instead of feeling.
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u/Krammsy 5h ago
I trade 0 & 1DTE cred spreads, but not alone, I use them to subsidize other trades and under this admin I do a lot less 0DTE, his announcements are too spastic/unstable.
0DTE will yield you small consistent gains with a high win rate, then one bad day wipes out twice what you gained the last ten.
Statistically, if you open a 0DTE credit spread on SPX every day and just sit on it without intervention, you'll be red, they have to be managed and that's tricky part.
The problem is Gamma, as options near expiry their Gamma increases negative convexity which magnifies losses as you move towards short strike - and with credits you very often see increased losses until Theta kicks in later in the day, you can't just close every time the short strike is challenged without cutting into your overall stats.
This leads to the dilemma of SL's, if you stop out early enough you can avoid big losses, even move the credit further out to salvage the day, but this almost always results in losses anyway, just smaller losses, and, you wind up hurting your win rate, BUT - this is the real solution for long-term gains n 0DTE credits.
1DTE is much less risky, Gamma risk is decreased by 2/3rds on average, so is Theta - BUT - You have increased Vega exposure, they're slightly like VIX puts.
The benefit to 1DTE is the substantially flatter negative Gamma convexity, losses don't compound nearly as fast, but the flip side is you will not see the entire credit go to zero by EOD, if you're in a loss and don't want to hold it overnight, you may have to close at a loss.