YT YouTube2Text

YouTube2Text → Transcripts → After 9,000 Trades, This Is Still My Most Profitable 0DTE Strategy

After 9,000 Trades, This Is Still My Most Profitable 0DTE Strategy — Transcript

by Theta Profits · 6,008 words · 826 segments · language en · Watch on YouTube

Open in transcriber Summarize with AI Download SRT/VTT

Full transcript

0:00I have the rule to never risk more than
0:02one to two% of my account on any single
0:06day. Zero DTE break even iron condors. I
0:11have done more than 9,000 trades with
0:14this options strategy and it has been
0:17consistently profitable for me for
0:19almost 5 years.
0:22Many followers of Theta Profits have
0:25asked that I make a video about my own
0:28trading. So here it is. Today's
0:31interview guest is myself.
0:34Welcome Yon Aar Sanan.
0:37>> Thank you John. Nice to be here.
0:40>> Okay John let's get straight to it. Give
0:43us the 42nd version of what the zerote
0:46break even condor strategy is. Sir break
0:50even iron condor is a day trading
0:52strategy on SBX.
0:55You sell multiple iron condors
0:58throughout the day and always try to
1:01collect equal premium on both sides of
1:03the iron condor. It has very tight stop-
1:07losses. You set separate stop- losses on
1:10each side and you set them equal to the
1:13total premium you collected for the
1:14whole iron contour. This means that if
1:17on uh the stop loss hits on one side,
1:20which is the most common scenario, your
1:23trade still ends up more or less around
1:25break even, hence the name.
1:28I've traded this now for almost five
1:31years. In total, I've done more than
1:339,000 trades and it's been consistently
1:36profitable for me over all those years
1:39with quite low drawdowns.
1:43We will break down the details of how
1:46you trade the zero DTE break even iron
1:48condor strategy. But first, tell us a
1:51little bit about yourself and your ways
1:54into options trading. I've been a
1:57journalist and communication manager for
1:59many years in Scandinavia's leading
2:02media company, Shipster, but I took an
2:05early retirement last March. And now I
2:09spend my time on options trading but
2:11also running this YouTube channel. I
2:14started with options trading in 2018
2:19I believe it was and for the first
2:21couple of years it was pretty flat. Then
2:24came the pandemic. I lost half my
2:27account by just taking too much risk.
2:30That was really a learning experience
2:32for me. And since then I've been
2:34profitable every year. Last year I made
2:3739.3%
2:39on my account. I just love trading
2:43options. There's so much to learn. It
2:45has this intellectual side to it, but
2:48it's also like this daily fight between
2:51the rational John and the emotional John
2:54that I'm quite fascinated by.
2:58I live south of Oslo in Norway, but I
3:03also have a house uh by the fjord on
3:06western Norway where I really love to
3:08spend uh spend time. And right now I
3:11have my winter base in Daang, Vietnam. A
3:15fantastic city that I really recommend.
3:18>> And you're also running this YouTube
3:20channel. Why is that?
3:21>> I started the profits as a way to learn
3:25even more about options trading myself.
3:27I've always found that sharing knowledge
3:30is the best way to also gain knowledge
3:33yourself. It also is a great way to
3:36combine my professional background as a
3:39journalist with a nerdy hobby as options
3:43trading.
3:43>> And the last personal question, we have
3:46called you both Yona and John so far in
3:49this video. What is your first name?
3:52>> Yona is what everyone calls me in
3:55Norway. It is combined of my first name
3:59Yon and my middle name Aina. And in
4:02Norway we often put the first and the
4:04middle name together as the first name.
4:08So Yona. But whenever I speak English I
4:11just switch to John. It is easier that
4:15way. Let's get into the basics. What is
4:19a zero DTE break even condor? So we can
4:24start with the basic terms in the name
4:26right uh zero DT zero days to expiration
4:32that means it's day trading
4:35it's a day trading strategy on S&P the
4:39options product that follow the standard
4:41and PO poor 500 index.
4:46It is iron condors which means selling a
4:50call credit spread on the upside and a
4:53put credit spread on the down sign at
4:56the same time opened as one trade.
5:01It has equal premium on both side or at
5:05least we try to get as equal premium as
5:08we as possible.
5:11And then you set stop loss on each side
5:14separately and the stop loss is set to
5:18be equal the total premium you have
5:20collected for the iron condor. So, if
5:22you have collected $200 for the whole
5:25iron condor, you will set the stop loss
5:27of $200 on the put side and a stop loss
5:30of $200 on the call side. This means
5:34that if one of the stop losses hit,
5:36which is one of the most common uh
5:39scenario, you have lost $200 on that
5:43side, but you have also keeping the $200
5:45you collected in premium. So, basically,
5:47you are break even. You only really lose
5:50on this trade if the stop loss hits on
5:53both sides, which in my case has
5:56happened in around 8% of the trades over
6:00the years.
6:03You place multiple trades throughout the
6:06day.
6:07How many? Well, well, that depends on
6:10your how you execute the strategy and
6:12your preference.
6:14>> Can we set up an example to illustrate
6:17this better? Here is an iron condor I
6:21set up in options strat on uh Tuesday,
6:24February 17, about 35 minutes after the
6:29market had opened. S&P at the time was
6:32about six 6,800
6:36and I was able to set up an iron condor
6:39that in total collected $300 in premium,
6:43$150
6:45on each side. I have sold a put at 6710,
6:50bought a put at 6680.
6:52I have sold a call at 6870 and I have
6:56bought a call at 6,900
7:00at the moment. Uh 10 about 10 minutes
7:03after the SPX has fallen about 10
7:07points, but the trade is still pretty
7:09much in break even. We can look at how
7:12this trade will develop on the over the
7:15day. If S&P stays at this level, we see
7:19that the profit level uh you know profit
7:22level will very quickly widen and at the
7:26end of the the day will be very wide.
7:29But we also see if we look at the thick
7:31line here, it doesn't take a big move
7:34down or a big move up before we are into
7:38minus. And especially early in the day,
7:41if we get a big move, the stop loss will
7:44hit very quickly. But a lot further out
7:47we get into the day, the bigger move we
7:49can tolerate before before the stop-loss
7:53uh hit. So this is basically a very
7:57typical trade that I set up with this
8:00strategy. So here we collected $300. The
8:04stop loss on the put side is then set at
8:07$300. And the same at the call side. The
8:10stop loss on the call side is set at
8:12$300. Which means that if the stop loss
8:15on the put side hits, well, we lose $300
8:19on the stop-loss, but we keep the 300 in
8:22premium. So basically break even. The
8:24same if it the stop hits on the call
8:27side. Of course also break even. We only
8:30really lose with this trade if the stop
8:32loss hits on both sides. In that case we
8:35will lose about $300 on this trade. And
8:38that happens in about 8% of the trades.
8:42In my experience this seems very similar
8:45to the zero DTE strategy called MEIC.
8:49Multiple entries and condors. What's the
8:52difference?
8:53>> It is essentially the same trade or at
8:56least they are very similar. MEIC
9:00is maybe a more known name, but I like
9:03uh to call them zero DT breaking even
9:05iron condors. I think that kind of catch
9:09that name catches the essence of of the
9:12strategy a bit better.
9:14MEIC is often connected to the trader
9:18Tammy Chamblas who trades a bit more
9:21mechanical than me and typically also
9:24collects higher premiums than my trading
9:28style. But you know for all practical
9:30purposes, these are two names of
9:33strategies that are very closely
9:35related.
9:37Let's get into the entry mechanics. When
9:40do you open new trades and how
9:43mechanical is this process?
9:45>> As I said, I enter these trades at
9:48multiple times throughout the day. I
9:51don't personally have a set time that I
9:54enter them, but in general, I enter one
9:57per hour, once per hour um in on
10:00average. I will often enter the first
10:03after about 10 15 minutes after the
10:06market has opened and then maybe the
10:08next at 10 15 around that. Uh then a bit
10:13after 11, one trade after 12, one after
10:16one, one after two and also I will enter
10:20after three depending a bit on the total
10:23risk picture I have at that time. I try
10:28to enter when the market has stabilized
10:31a bit. So if there is a big move up in
10:35the market, I will wait for the market
10:38to somehow stabilize. Typically I will
10:40wait until I see two or three five
10:44minute candles on more or less the same
10:47the same level. And the same if the
10:49market is dropping, I will kind of wait
10:51till I see some signs for it to
10:54stabilize or signs of it reversing. But
10:58five the five minute candle is
11:00essentially what I'm using for this. And
11:02I, as I said, I like to see at least a
11:05couple of five minute candles on more or
11:07less the same level before I before I
11:10enter a trade. The number of trades can
11:12vary a lot. depends partly on my
11:15personal program that day because these
11:17trades do need to be you know monitored
11:20a bit. So if I have a busy schedule on
11:24busy personal scale that day I may enter
11:27fewer trades. If I have you know the
11:29time to fully concentrate on my trading
11:31I may enter more but it also depends on
11:34the total risk I'm taking on and how the
11:37trades I already have on are are doing.
11:40I always try to look at what is the
11:43worst that can happen at any time and if
11:47I feel I have too much risk on or
11:49approaching my limit then I may hold on
11:54entering new trades. I enter one spread
11:58at a time typically the call side first
12:01and then immediately after I will enter
12:04the put side. I don't try to leg in
12:07though that you know by waiting for the
12:09market to move up and down. I I my
12:12philosophy is to enter both of them you
12:15know more or less at the same time. But
12:17I find that I get a bit better feel if I
12:19first do the call spread and then the
12:21put spread less slippage so to speak
12:24than if you enter it all as one iron
12:26condor. It's also easier to control that
12:29you get the same premium on both sides.
12:33How do you decide your strikes and the
12:35width of your wings?
12:37>> I don't have a set rule for this, but in
12:40most cases, I will the short will be at
12:4410 to 15 delta and I will collect
12:47between $100 and $200 uh on each side.
12:52So, $2 to $300 for the full anor.
12:56Sometimes especially if volatility is
12:59high I will go you know I will collect
13:02higher premiums but most cases I am
13:05between 10 to 15 delta and $100 to $200
13:10on each side of the iron condor. My
13:13starting point for the width is is uh
13:16always 30 but then I will adjust on one
13:20side to collect the same premium.
13:22Sometimes, you know, one side may have
13:2425, sometimes it might have 35 and well,
13:29even 40 and more sometimes, but the
13:32starting point and most typical iron
13:35condor, it has a width of 30 on each
13:38side.
13:40>> How many trades will you have on at any
13:42time?
13:43>> I can have up to 10 trades running at
13:47any time, but that is rare. I would say
13:50how many trades really depends on the
13:53total risk picture of the day and how
13:55the market is looking. As I said, I
13:58typically enter one trade per hour,
14:01which means that I will have, you know,
14:03about six or seven trades running at the
14:06end of the day. But, you know, sometimes
14:09I will add extra trades if I have the
14:12time to monitor it and I feel that that
14:14is good. I have the rule to never risk
14:18more than one to two% of my account on
14:21any single day. This is measured by the
14:24risk if all stop losses are hit on both
14:27sides on all the trade. It if that worst
14:31case scenario happens, I should not lose
14:34more than 1 to 2% of my total account. I
14:38also have the rule to never use more
14:41than 50% of my available buying power on
14:45this strategy on any single day. So
14:49really my assessment of my total risk at
14:52the moment also influences how many
14:55trades that I will uh I will put on. If
14:58things are going wrong and many of my
15:00trades are, you know, close to losing or
15:03stop losses have already been hit, I may
15:05be careful with adding new trades. I'm
15:08curious, are there times during the day,
15:11for instance, the last hour before the
15:13market closes when you will not trade
15:16this strategy?
15:18No, I enter trades every hour, but my
15:23statistics tell me that over those five
15:26years I've been trading this strategy,
15:29the last 3 hours of the market days have
15:32been the most profitable hours to open
15:34trades. So, that's the hour that starts
15:37with 1:00 p.m. Eastern Standard Time,
15:392:00 p.m., and 300 p.m. Those have the
15:42best results in the long run. But I also
15:45noticed that these statistics
15:48vary a lot from one month to another and
15:51one quarter to another. So I've decided
15:53to not take it into account and open
15:57trades on the individual day on all
16:01hours or as I see fit on that particular
16:04day. Let's get into the exit mechanics.
16:08What are your rules for when you exit
16:10these trades? The main rule is that I
16:13leave the trade on until my automatic
16:16stop orders hit or the shorts hits the
16:21value of 5 cents when well where when it
16:24will also be automatically closed.
16:28Sometimes I will tighten the stop losses
16:31during the day. I can do this to you
16:34know make sure I have capture some of
16:36the profit that I've already collected.
16:39But it is can also be a way to control
16:41the total risk I have on. If I have a
16:44lot of trades on and I am considering
16:47enter new ones, I can reduce the risk by
16:51tightening stop- losses of some of those
16:53trades that are at the moment doing
16:55pretty well. Why do you close your
16:57shorts at 5 cents instead of just
17:00letting them expire worthless?
17:02>> The main reason is basically to take
17:04risk off the table. It allows me to
17:07reuse the longs for new trades and often
17:11I it means that often I can sell
17:14strangles in during the last hour
17:16because several shorts have already been
17:18closed and I can sell strangles reusing
17:22the the longs because when the shorts
17:25hit five cents the the long no longer
17:28have any value so it's no point in
17:30selling them but they can be reused for
17:34new trades to you know limit the buying
17:36power. Another reason is by closing at 5
17:40cents. I often avoid the risks of those
17:44huge swings that sometimes can occur
17:46during the last half hour. There have
17:49been several occasions where I have had
17:52the shorts being closed out for 5 cents
17:55and then market have made a big move and
17:58the same shorts that were closed
18:01suddenly have gained a lot of value and
18:04other traders who were waiting for them
18:06to expire worthless see big losses. So
18:10I've been I've avoided those last minute
18:12swing losses sometimes due to this due
18:15to this rule. But you know it just makes
18:18me more calm what to take risk off the
18:21table and to know that trades have been
18:24uh closed and my total exposure has been
18:27uh reduced.
18:28>> Can you explain more in detail how you
18:31set up your stops?
18:32>> Yes, I set the stops a bit differently
18:35than many other traders. The first is
18:38that I only set them on the shorts. I
18:42used to set them on spreads but decided
18:45a while back to change to only the
18:48shorts and I found that that in general
18:50gives me much less slippage than when I
18:54have the stops on spread especially when
18:56the market is moving very fast. It also
18:59allows that the order can rest at the
19:01exchange instead of the broker which you
19:04know saves some milliseconds or seconds
19:07and in some cases can be very beneficial
19:10again in situation where the market move
19:13very fast. Then is the question of
19:15should I set a stop limit order or a
19:17stop market order. I do both. I use a
19:21functionality called oko one cancel the
19:24others. By doing that, I can set the
19:26stop limit order and then a stop market
19:29order further out. So to be more
19:31specific, I I set the stop uh limit
19:34order with 40 points between the stop
19:38and the limit price. And then there is a
19:40stop market order 30 points further out.
19:44And with OK, one cancels the other. You
19:47know, if one is triggered, the other one
19:50is automatically cancelled. My way of
19:53thinking around this is that I really
19:55want the stop limit order to be the one
19:57that triggered. That's the one that is
20:00closest. But there are cases especially
20:04when the market move extremely fast in a
20:07short amount of time where the stop
20:10limit order can be skipped. And for me
20:13then the stop market order 30 points
20:16further out is kind of like the last
20:19line of defense. It ensures that I get
20:22out of the trade okay at the poor fill
20:25but I get out before the losses get
20:28astronomical. You say you set the stops
20:30only on the shorts. What do you do with
20:33the remaining longs when the stops are
20:36hit?
20:37>> The main rule then is to just close it.
20:40But sometimes the market have kept
20:44moving in the same direction and the
20:45long is gaining value. In those cases,
20:48you know, I might actually make money on
20:51the long and the whole trade in the best
20:54cases may actually end up profitable.
20:56So, what I will do if I see that the
20:59long already has that the market keeps
21:02moving uh keeps moving in that direction
21:04and the long has already more value than
21:08what I assumed for the break even
21:10scenario. I might set a stop market
21:14order on the longs, you know, at that
21:16level where where the trade will be
21:18break even and uh let that one run and
21:21then adjust it if the market it keeps uh
21:25moving in that direction. This hasn't
21:27happened that often, but sometimes I'm
21:29able to gain extra profit, sometimes big
21:32profit even by doing it in this way. But
21:35the main role is to just close the long
21:38right away because market may also turn
21:40around as we all know and then the long
21:42will lose value very fast and you're
21:45just adding to your losses. So it really
21:48requires a bit of attention when when
21:51this happened. You do need to monitor uh
21:54the long and take action quickly after
21:58the stop-loss hits, especially on the
22:00put side. on the call side, the longs
22:03will typically have much less value and
22:07much less gamma at uh later in the day.
22:10So, so I think um you don't see this
22:14scenario as often.
22:16>> So, let's get into management of the
22:18trade. How do you manage the trade
22:20throughout the day?
22:22>> My main management is to adjust the
22:26stops. There are two reasons for
22:28adjusting the stops. One is as the longs
22:31will lose value as the day go on and I
22:35want to tighten up the stops accordingly
22:38so that it still is at a break even
22:40level if it hits. But the other is also
22:44that I might tighten up stops just to
22:46reduce the total risk of all my trades.
22:50That's a continuous you know assessment
22:52I'm doing where I look at you know what
22:55is my total exposure right now? What is
22:57the total risk I have right now? What is
23:00the worst that can happen right now? And
23:02if I do have then a number of trades
23:05that are, you know, doing quite well,
23:07but others are being threatened and
23:10maybe risk at double stop- losses, etc.
23:13Then I might want to tighten up some of
23:16them so that I basically reduce the
23:18total risk. So adjusting the stops is
23:23basically the only management I do of my
23:25trades. I never try to adjust the trade
23:28otherwise or roll them or something.
23:31These are zerodt trades. I don't adjust
23:34them in other ways than tightening up
23:37the stop losses. We have to talk about
23:39risk. What is the worst that can happen
23:43when trading zero DTE break even iron
23:45condors?
23:46>> I think there are two worst case
23:48scenarios.
23:50One, the first and most comp common is
23:54if all trades end with double stop-
23:57losses. This can happen in whipsaw
24:01markets where the markets is jumping up
24:03and down throughout the day. And that's
24:06also why position sizing is very
24:09important and the rule of never risking
24:12more than one to 2% of your total uh
24:15count in a single day. Double stop
24:18losses have happened for me about 8% of
24:22my trades. This percentage is a bit
24:25higher has been higher the last year
24:27than it was in in the first years I
24:30traded this strategy. Maybe an
24:33indication that the market is there is
24:35more intraday volatility than than
24:38before. But double stop losses really is
24:40the enemy or the main risk of this
24:44strategy because that's when you have
24:46real losses. If stop-loss is hit only on
24:50one side, the trade will end more or
24:53less around break even. There is another
24:56really bad thing that can happen that is
24:59catastrophic
25:00pills. I have been pretty lucky with
25:03that. But you know there are situation
25:05again when the market moves very fast
25:08and very far in a short amount of time
25:13liquidity disappears from the market and
25:16you have the risk of getting pretty
25:18catastrophic fills.
25:20There are a lot of stories are out there
25:23of people of traders who have
25:24experienced this. So that is a risk you
25:27also need to take into account and again
25:30position sizing is really important
25:32here. not you have [snorts] more trades
25:35on than what you should. Basically,
25:39>> what are other risks that traders should
25:42be aware of?
25:43>> I think the most important is be aware
25:46of that this is a strategy where you
25:48actually need to monitor your trades.
25:51Alternatively,
25:52if you have set up automation, I have
25:55not done that so far, but if you set up
25:57automation that you have good rules set
26:00up that take care of the risks, the
26:04major risks with this strategy is
26:06essentially situation with big and
26:09sudden moves in the market. They can
26:12also be big opportunities when you have
26:16the stops only on the shorts as I have.
26:18But you know that's that's when you have
26:21the risk of getting bad feels. That's
26:23when you have the risks of a lot of
26:25stop- losses hitting. When I say there
26:28is opportunity, it is also because that
26:31you know when this happen and if you
26:33have the stops only on shorts as I do
26:35the longs gain value very quickly if the
26:38market moves in that direction. What
26:41looked like a trade that will be a
26:43losing trade can suddenly be a
26:45profitable trade. I had that experience
26:48on uh on April 9th, for instance, when
26:51when uh Donald Trump was rolling down
26:54many of his tariff threats and the
26:57market made a huge jump of 10%.
27:00Several of my stop losses hit on the
27:03cold side. But then the longs gain value
27:07and when I closed them, I closed uh
27:10closed them at a value where the whole
27:12trade was at uh at profit and I made
27:15good money that day because of that. But
27:18that's that's really the exceptions and
27:20not planned for with the ok stops that I
27:23described where I have one cancels the
27:26other where I have both a stop limit and
27:27a stop market order. They should not
27:30trigger at the same time but every now
27:32and then few times every year it does
27:35happen that they trigger both at the
27:37same time and then you are suddenly long
27:40what you were short because you got an
27:43extra you got an extra long essentially
27:46that is a risk but you know in mo most
27:48of the cases I've been able to get out
27:51of it without the loss I always ask my
27:54guests so I will ask myself as as well
27:57where would you place this strategy on a
28:00risk profile scale from one being very
28:03low risk to 10 being very high risk.
28:08I would put it at a four. That is though
28:12assuming that you are able to trade it
28:15with discipline, that you are setting
28:17the stop- losses, that you are sticking
28:20to the rules, that you are limiting your
28:24total risk to 1 to 2% etc.
28:28But if you're able to do that, I would
28:31say as a zero DTE strategy, it is a bit
28:35on the safer side. I would argue it has
28:38relatively low drawd downs. It will of
28:41course as all strategy have draw downs,
28:43but it has relatively low drawdowns, but
28:47again it assumes that you are
28:49disciplined.
28:52If you're not disciplined, well, it's
28:53not the four. John, what has been your
28:56results trading this strategy and how do
28:59you measure the results? So, let let me
29:02start by showing the overall graph of my
29:07results since I started trading this
29:10strategy in April 2021.
29:14This graph you see how it has, you know,
29:17been consistently profitable month by
29:19month. I do not share the exact size of
29:23my account and I'm not going to give you
29:26a total percentage either because you
29:28know I do trade other strategies in the
29:31same account and like so just by telling
29:34you how much my account has been growing
29:36does not really show that overall
29:39results but this graph shows you know
29:41the monthly profits and and illustrates
29:45also the cumul cumulative profits that I
29:47have collected over those years and as
29:49you See it is a very steady graph going
29:53upwards with a few small draw downs but
29:57not really big. The posit overall
29:59picture in my opinion is very positive.
30:02So let's go to how I measure the
30:05results. I found that traders measure
30:08their results in many different ways. I
30:11measure this strategy in two different
30:13ways. The first is what I call net
30:17profit per average trade. With this
30:20measurement, I've had a average net
30:24profit per trade as 0.28%.
30:30How do I measure this? Well, I take the
30:32net profit of the trade. I divide it by
30:35the risk of that trade. And the risk is
30:39of course the width of the biggest
30:41spread minus the premium I collected.
30:44Essentially the buying power I'm using
30:46for the for the trade. So I I measure
30:48this on all trades I do. When I take all
30:52those 9,000 plus trades into account, my
30:56average net profit per trade has been
30:590.28%.
31:01Doesn't sound much, but remember this is
31:04day trading. This is capital being used
31:06again and again each day and it adds up
31:10quite a bit when you analyze it. The
31:12other way I use to measure this is
31:16premium capture rate. With this way of
31:18measuring, you take your net profits and
31:21you divide it by the all the premium you
31:25collected and that gives you a premium
31:29capture rate.
31:31My average premium capture rate over all
31:34those 9,000 plus trade has been 5.65%.
31:39Maybe not a lot, but it's been
31:43profitable all those all those years.
31:46This these are two alternative ways of
31:48measuring. And let's if we take a very
31:51quick look here is the graph for the net
31:56profit per trade month by month over
31:59those years. And here is the same graph
32:03for the premium capture rates. So what
32:06we see, you know, is that they both have
32:10look very much look very much the same.
32:12They pretty much measure the same thing.
32:14I like the net profit percent per trade
32:17best myself and I think it's a very good
32:20way over time to measure a zerod trade
32:23strategy. What is the win loss rate?
32:28the win rate has stayed consistently at
32:31around 40% over that time. And I think I
32:36think this is a great example of why win
32:39rate is not something we should be that
32:41focused on. A strategy with a low win
32:44rate actually most of the trades end up
32:47with loss can still be profitable. Some
32:50people fall in love with win rate and
32:52brag about the high win rate. But win
32:55rate in itself does not guarantee that
32:58the strategy will be profitable in the
33:00long run.
33:02And with this strategy also win rate is
33:05not really [snorts] that relevant for
33:07another reason is that the break even
33:09trades the trades that end with the stop
33:12losses uh hitting on one side. Well,
33:15most of those will end around break
33:18even. Some will end with a few dollars
33:19in plus also so wins. Some will end
33:23with5 or $10 in minus losses.
33:28And it's a bit of how tight the stop
33:30loss is at and coincidential of where
33:33the where each trade will happen. So for
33:36me the win rate is not really that
33:39relevant to this strategy.
33:41Why would you trade the strategy with
33:43such a low win rate? because it has
33:46positive expectancy
33:48and that's what we need to understand
33:50with win rate. We know the formula for
33:53expectancy. You take the win your win
33:56rate and multiply by the average size of
33:59your wins. Then from this you deduct
34:02your loss rate multiply with the average
34:06size of your loss. From this formula you
34:10get the expectancy and the most
34:12important is not your win rate or loss
34:15rate. The it is what that you have
34:18positive expectancy of the strategy.
34:21This strategy for me has had 40% win
34:24rate but the wins are more than twice
34:27the size of the average losses and
34:30because of that it has positive
34:32expectancy even though it has only 40%
34:36win rate.
34:37You open these trades throughout the
34:40day. How is the time you open uh the
34:43trade affecting your results? Do you see
34:45any difference depending on day of the
34:48week or hour in the day? Yes, there are
34:52clear differences when I look at the
34:54statistics over all those five years.
34:57Mondays and Fridays are the most
35:00profitable days. Tuesday and Wednesdays
35:03are more, let's say, medium profitable
35:05days. and Thursdays have been for
35:09practical purposes break even days on
35:12average. Also the time of the day matter
35:15when I look at the statistics for all
35:17those five years the three last hours of
35:20the market day has been the most
35:22profitable. That's the best time to open
35:25new trades according to my statistics
35:28and my way of uh trading. But again,
35:32this can vary significantly from one
35:35quarter to another. And I basically
35:38decided not to really pay attention to
35:41it that much because I think even though
35:44that's what the long-term statistics
35:46show, this month might still be very
35:50much differently. Let's sum up. Who is
35:53this strategy suited for and who is it
35:56not suited for? I think this is a
35:59strategy to consider for traders who are
36:02a bit riskaverse but would love to get
36:04into zerodt trading because it does have
36:08at least in my experience pretty low
36:10drawd downs but you need to have the
36:14time to monitor your trades otherwise it
36:18be can become quite risky. you must have
36:21that time to monitor the trade and it's
36:23also a trade where you you know you do
36:25want to be able to put on several trades
36:27not just one I think many traders and I
36:30haven't done this but many traders have
36:32set up this strategy or similar
36:34strategies on automation and this is
36:37working well for them. It is my ambition
36:40to also try that for myself and and I
36:43want to try that to see if I can reduce
36:45some of my time. But you know, you need
36:47to either be able to monitor your trades
36:49or set up this in a very good way in a
36:52trade automation software.
36:55>> What are the two or three most important
36:58takeaways you want the audience to
37:00remember from them from this interview?
37:03>> The first takeaway is that you need to
37:06be disciplined. You need to stick to
37:09your rules.
37:11If you're not able to be disciplined and
37:14stick to your rules, this is not a
37:16strategy for you. The second takeaway is
37:20always pay attention to your total
37:23risks.
37:26Know what what is at risk at any time.
37:29Know what is the worst that can happen
37:31at any time. know what will happen, how
37:34much you will lose if all stop losses
37:36are hit on the trades you have on. This
37:40is crucial to have that picture at any
37:43time to avoid too big losses on any
37:47single day. And the third, you really
37:49need to keep a trade log of some form so
37:52that you can analyze your trading,
37:54analyze your wins and uh wins and
37:57losses. I think it's very hard to
38:00succeed with a strategy like this or a
38:03lot of other strategies as well if you
38:04do not have a good trade log that allows
38:07you to analyze that particular strategy
38:10in detail.
38:12>> How does this fit with other strategies
38:14you trade?
38:16>> This has been my bread and butter
38:18strategy and the one I do on zero DTE.
38:22It's been a big chunk of my profits the
38:24last few years. But I do also trade
38:27other long-term strategies. Uh I do in
38:30the money covered calls. I do the wheel.
38:32I do time flies spreads. And over time,
38:36I do want to put more of my attention
38:39into my longer uh longer terms
38:42strategies. Also, I want to find
38:45strategies that, you know, play well
38:47together. But this has been my bread and
38:50butter strategy.
38:52John, what would be good resources to
38:55learn more about this style of trading?
38:58There are a few videos on the profits
39:01that are about similar strategy. There's
39:04an interview with David Baronson. There
39:07is an interview with Nick Magno and
39:10there is a video with Tammy Chamblas
39:13where she explains her way of trading
39:15me.
39:17I will also recommend the Facebook group
39:19quantum options that is run by Tammy
39:23Chamblas. Tammy Chamblas has you know is
39:26sharing every day how she is doing with
39:29her way of trading this strategy and
39:32also sharing a lot of knowledge and uh
39:35research. So I do really recommend if
39:38you want to trade this way to join the
39:41quantum options uh Facebook group. Yay.
39:46Thank you very much for sharing your
39:48zero DTE break even iron condor
39:50strategy. And remember we have a many
39:54other interviews on this channel about
39:56the different zerodte trading
39:59strategies. So check them out. Thank you
40:02very much. This was fun.

About this transcript

This page contains the full transcript of After 9,000 Trades, This Is Still My Most Profitable 0DTE Strategy by Theta Profits, generated from the public captions YouTube serves with the video. The transcript has 6,008 words across 826 segments, with the original timestamps preserved so you can click any line to jump to that moment in the embedded player.

What you can do with it

Use the transcript to take notes, quote the speaker, build a study guide, generate a summary with ChatGPT or Claude via the YouTube Summary tool, or export it as a timed subtitle file with YouTube to SRT. You can also re-open it in the transcriber to translate the transcript into 100+ languages.

Free YouTube transcript tool

YouTube2Text is a free YouTube transcript generator — no signup, no daily limit. Paste any YouTube link and get the full transcript instantly, with timestamps, click-to-jump, translation to 100+ languages, AI prompts for ChatGPT, Claude, and Gemini, and exports to TXT, SRT, VTT, or Markdown.