0DTE – 5 delta Iron condors

[Gabriel SKeymaster]

Some of you requested me to share my 0DTE trades. This is a very simple “mechanical” trade but there’s a few things to be a aware of.

Mechanics: At the open I sell a 20pt wide put and call credit spread with the short at 5 delta. I look for about .65cr on both sides.

Stops: I set a stop limit at 3x the credit received on the whole iron condor. For example, if I got 1.30cr for the the iron condor I set my stop (triggered on the bid) at 3.90 and the stop limit at about .40 higher (4.30db in this case). The other part of the order setup as a OCO order is to close each spread separately for .10db. This allows me to take advantage of the market swings and be out of the trade as quickly as possible.

Stop order screenshot

If I get stopped out and internals support it (ticks, breadth, order flow, tempo) I let the long leg run until I see the move has stopped or slowed down and then close it for hopefully enough credit to offset the loss. On a strong trending day this long leg could actually make you more money than the credit received.

Things to be aware of:

1-ALWAYS respect your stops. This will ensure the probabilities work out.
2-On big news events (FOMC, etc) your stops might get triggered and could get filled for a higher amount or not get filled at all. I usually avoid being on the trade. Same goes for MOC at 3:50pm EST. I want to be out of the trade no matter what before 3:30pm EST.
3-This is a trade that you want to be watching, not a set it and forget it. Stops can and will get run on a fast moving news event.
4-VIX is above 20 nowadays so keep in mind lower volatility will make this trade work differently so don’t take these rules as the only way to do this trade.

• This topic was modified 3 years, 8 months ago by  Gabriel S.

[J.W. FParticipant]

Thanks for sharing, Gabe. Looks like your Stop order screenshot shows only the puts. I assume you have the same order for the calls, right? Same stop of 3.90, and stop limit +.40 higher on the bid, correct?

[Gabriel SKeymaster]

Correct!

[olufemi gParticipant]

thanks for this. could you also put up a corresponding screenshot of the actual trade you placed here in this example here too for clarity? i tend to really mix up IC strikes. thanks

[Gabriel SKeymaster]

This is an example of an opening order. You can also enter the put spread and the call spread separately.

[anand nParticipant]

You would need a margin account for this trade right ?

Is this specific for SPX or could be applied for SPY or QQQ as well ?

[Gabriel SKeymaster]

You could apply it to whichever underlying. SPX has expirations every day of the week so it provides more opportunities. As far as margin goes, all you need is an account where you can trade spreads.

[Gabriel SKeymaster]

UPDATE: I am now using a ~2.5X stop instead of 3X

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