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How to Trade 0DTE Index Options With a Tenth of the Risk
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ticker lesson
Breakdown
0:00SPX· ticker
SPX zero DTE options — quick resolution, $7,400 price
- Zero DTE options offer quick profit/loss resolution
- SPX priced at $7,400
- Options cost $21 due to linear pricing
- Iron condor example: sell 7,300/7,290/7,440/7,450
- Max risk $725, max profit $280
2:42XSP· ticker
XSP zero DTE options — 1/10 SPX size, $73 price
- XSP is 1/10 SPX size at $73
- Strike prices 1/10 scale (740 vs 7,400)
- Options cost $2 vs SPX $21
- Iron condor credit $0.28 vs SPX $2.80
- Max risk $72 vs SPX $725
5:48lesson
Index size affects option pricing
- Linear relationship between index price and option cost
- Higher underlying price = higher option price
- XSP options are 1/10 SPX size
- Bid-ask spreads scale proportionally
5:49lesson
Strike price granularity limitations
- XSP lacks half-point strike prices
- SPX 7445 = XSP 744.5 strike
- Fine-tuning requires SPX for precision
- XSP lacks half-point strike options
5:50lesson
Risk/reward trade-offs between SPX/XSP
- SPX allows single trade for $725 risk
- XSP requires 10 contracts for same risk
- XSP better for small risk exposure
- SPX suits experienced traders with capital
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