Is 0DTE a tool to make you super rich or gambling?
Zero-day expiration (0DTE) options, also known as same-day expiration options, are options contracts that expire on the same day they are traded.
This concept has been expanded: options expiring that week can also be counted as 0DTE.
Advantages of 0DTE Options
0DTE’s advantages and disadvantages are the two sides of the coin. It can amplify the P/L in very short time.
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Potential for Quick Profits: 0DTE options can offer the potential for rapid and substantial profits if the underlying asset moves in the desired direction shortly after the trade is executed.
Reduced Time Decay: Time decay is a significant factor in options pricing. With 0DTE options, time decay has minimal impact because these contracts expire the same day they are traded.
Intraday Hedging: Traders can use 0DTE options to hedge existing positions or protect against adverse price movements during the trading session.
Disadvantages of 0DTE Options
0DTE options enjoy a very bad reputatio in investing community and is viewed as gambling by most retail investors.
High Risk: 0DTE options are extremely speculative and come with a high level of risk. The short expiration period means these options very sensitive to short-term price fluctuations.
Increased Volatility: Sudden price swings can result in substantial gains or losses.
Potential for Liquidity Issues: Some 0DTE options, especially on less-liquid underlying assets, may suffer from low liquidity. This can make it challenging to enter and exit positions at desired prices.
Overall, 0DTE options can be a powerful tool for experienced traders looking to profit from short-term price movements, but they should be approached with caution due to their high risk and limited time frame.
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Have you ever tried 0DTE options?
How do you view 0DTE options and ETF?
Is it gambling or a good profit-taking tool?
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lcompany turns bellyup but options can lose 100% premiums if don't get it right, no?
quite interesting if you are able to predict correctly what the price movement is next day or week.