Unless you have been hiding beneath a very large igneous rock, you know that a shocking percentage of options volume is based on compulsive gamblers (many of them relatively young traders) who are getting their ya-ya’s out by trading 0-DTE options. That is to say, they are gambling with options that have hours, or even just minutes, to live before they expire.

I am multi-dimensionally conservative, so I don’t usually pull that kind of crap, but I did yesterday afternoon, and it just proves to me once again I just don’t have the temperament.

To explain the markings on the /ES chart above (and to be clear, I was trading the SPY, but it’s the same thing):

• The first green arrow is when I bought SPY puts expiring Friday (so, strictly speaking, I was buying 1DTE options, but the point is the same);
• The second green arrow is when I bought more of the same puts since they had fallen in price (typical “averaging down” amateur move);
• The red arrow is when I dumped them all for about a $460 loss. It was a tiny “just for the hell of it” position of about $4,000, so I just say “Screw It” and ate the loss.
• Had I possessed the balls to just hang on, I GUAR-AN-TEE what would have happened next. The market would open, the market would rip higher, and I would have sold them where I’ve put a red circle, which would be about a $2,000 loss, more than four times as big as I actually had.
• Further, had I done so, I would be absolutely raging at myself now, because the SPY options are VERY profitable.

In spite of the business I’m in, I just don’t have this desperate need for 0DTE adrenaline, and in a way, I’m glad I took the small loss yesterday even though, in hindsight, holding them until this very moment would have thrown off a nice little profit. It’s sort of amusing that it actually was a good purchase.

It just ain’t me, babe.

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