0-DTE and 1-DTE options trading has gained popularity among newbie option traders with small trading accounts. Why?
Most traders are initially attracted to options trading for the potential quick and large returns. Short term option trades provide this possibility.
It’s an interesting topic in that it contradicts what market makers have been teaching to retail traders for decades – to trade short term to benefit by capturing theta.
Short DTE options can result in huge returns, once in a while, because of the increased gamma and lambda attributes of short term options. Even though theta increases near expiry as the mm’s teach, the impact of gamma and lambda also increase, debatably more than theta, which means short term theta trades are not where the money is. That would explain why most traders who focus on theta never see success.
Check out our Youtube video below to see how you can implement statistics into trading short term options.