The market started off 2025 with slight selloff after an uptrend in the pre-market hours. Trading spy options on the put side this morning turned a quick profit as the call options were just drowning…
Spy 0dte Option 584 Put Strike
The chart above shows the Spy 0dte options 584 PUT strike (Thursday Jan 2, 2025), now let’s dive into the ways to trade this 0dte put option. As you know, the options chart follows the Spy and ES (E-mini S&P 500 futures) with some slippage due to theta decay, so trading ATM (at the money) or near OTM (out the money) is best unless there is a lot of pressure from one side, and today it was the put side. Put options “out of the money” did make sense in this scenario because the volatility to the downside was building momentum fast.
- Testing the MACD indicator on the options chart (above). Will update the outcome in a few weeks.
The market was rather low volume as most Wall Street traders probably took the day off due to the holiday (or still recovering from the New Years Eve party). The days prior and after a major holiday are quit slow on the stock market. Let’s get into today’s best 0dte option trade…
Entry Point:
From the chart above (584 put), a good entry point would have been at the .50 price right around the 9:25 am mark as the indicators and candlestick patterns were pointing to the downside. Spy then remained flat until the end of the day, with not many opportunities to scalp.
Exit Point:
The best overall exit point would’ve been around the 3.25 mark at 9:45 am (pst). The chart indicators (moving avg, bollinger bands, RSI, CCI) and candlestick patterns on the Spy & ES were signaling more selling. The 1-hour time frame showed strong downside as the 5 and 15-minute showed more of a reversal possible. That’s why it is important to look at all 3 time frames to make a more informed decision.
This 0dte trading SPY options trade (PUT) scenario represents a 6.5x, meaning a 650% profit could be made from this quick 20 minute trade. As the day continued, the Spy was just in a flat-line mode due to low volume. The CALL option strikes today did not have any momentum, even though it seemed like there would be an opportunity intraday, it actually came near the end of the trading day with a slight pop to the upside.
Profit Example:
- 100 contracts bought at .50 ($5,000 investment)
- 100 contracts sold at 3.25 ($32,500)
- Minus $5,000 investment = ($27,500)
- Minus 100 contracts cost at .65 ea ($65) (ThinkorSwim)
- Total Profit: $27,435
Key Takeaways to Watch:
- Watch the time frames and chart indicators on Spy and /ES, and the option strike price simultaneously, make adjustments or change the 0dte options strike price when needed.
- Technical indicators on SPY supersede all else when trading their option from their option chart like above. (same for other stock symbols)
- Keep on eye on Level 2 (Bookmap heatmap is best) signaling demand targets on the ask/bid side (try to stay under 200 as higher = slower fill rate).
Conclusion:
Spy and the rest of the market started off the new year with a sell off as soon as the market opened. Many stocks felt the smackdown, even options for Apple stock. The 5-minute, 15-minute, and 1-hour chart time frames shows the “checklist” scenario with the 1-minute giving key insights for fast in/out scalping. Keep in mind, there is still a gap open on the Spy at 576.74 (from November 6th, after the Presidential election) and worth keeping eyes on that. Possible downside to close that gap soon seems inevitable.
- This type of trading spy options scenario can happen almost daily when day trading options (Spy and QQQ offer “zero-day-to-expiration” options). Many opportunities to trade options as they are high volatility, liquidity, and offer large profits as well as losses. So please know and understand the risks involved.
If you miss it today, you may catch it tomorrow…
