Jorge Rodrigues @jgrod85 - Twitter Profile

jgrod85 retweeted

6 months ago

Choosing "Optimal" Options Contracts For Day Trades Let’s talk strike prices. Risk Level For short day trades or scalps, I usually want to be modestly aggressive. Think 7 out of 10 on the risk/aggression scale. For that type of trade, I’m usually looking for contracts that are liquid, responsive, and priced in a range where the stop does not become absurdly tight. Contract Price In general, I like contracts in the $0.40 to $0.80 range. That is usually my sweet spot for short-term day trades, assuming there is strong volume and open interest. This applies most often to 0DTE index options and weekly expirations on individual equities. The reason is simple: I want enough premium for the contract to move, but not so little that every penny becomes a massive percentage move against me. Expiration and Theta With 0DTE, risk increases as the day goes on. The later it gets, the more theta starts working against you. Contract value can decay very quickly, even if the underlying move is not dramatic. If it is late in the day and the pace feels too aggressive, one simple adjustment is to look at the next day’s expiration. That can help reduce the intensity of the trade. How To Reduce Aggression If you want to be less aggressive, you can generally do that by: - Choosing a later expiration - Going closer to the money or deeper in the money. - Selecting a higher quality contract with more intrinsic value - Avoiding extremely cheap, low-probability contracts - Deeper ITM contracts usually carry more intrinsic value and less pure theta/IV exposure. -Cheap, far OTM contracts are often more like fliers. Why I Avoid Very "Cheap" Contracts Once you get under $0.30, and especially near $0.25, the trade becomes extremely tight. Example: You buy a contract at $0.25. If the bid is $0.24, you are already down $0.01 on the spread. That one penny is a 4% move. If your stop is 10%, you are already almost halfway there the moment you enter. This is why cheap contracts can be deceptive. They look inexpensive, but the percentage movement is massive. A one or two penny move can stop you out quickly. The Flier Trap A $0.25 contract can become $0.16 very quickly on a 0DTE move. That is a 36% loss. If you entered that trade prepared for it to be a flier, fine. That is a defined strategy 👍 But deciding it is a flier after it moves against you is not strategy 🙅‍♂️ That is usually just an attempt to justify your bad entry. Fliers should be rare, calculated, and sized properly. They are high-risk, low-cost trades where the upside must be clearly asymmetric. My General Preference To recap: I generally prefer the $0.40 to $0.80 contract range for day trades. Time of day matters heavily with 0DTE. There comes a point where theta erodes value too quickly and changes the risk calculation. Risk can be adjusted through: Contract price Strike selection Expiration date Delta Liquidity Time of day The small details matter. Tip I Share With Insiders Trading My Live Stream Signals: Is 0DTE moving too fast for your comfort level? That's OK - everyone has a different threshold. If IV moves are shaking you out, or the action feels too volatile, look at next-day options. There is nothing wrong with reducing the speed of the trade. The goal is not to prove how aggressive you can be. The goal is to execute well. Final Thought No FURU nonsense aiming to for unrealistic targets. No random contract chasing. No emotional “it’s a flier now” excuses after the trade goes against you. The goal is to be prepared, professional, and consistent. Contract selection matters. Strike selection matters. Theta matters. Liquidity matters. Stops matter. The small details are often the difference between a controlled trade and a panic trade. These are the general protocols I use myself and that Insiders are provided as well. If this was helpful, bookmark it for reference and share with others.

ProfitsTaken's tweet photo. Choosing "Optimal" Options Contracts For Day Trades

Let’s talk strike prices.

Risk Level

For short day trades or scalps, I usually want to be modestly aggressive.

Think 7 out of 10 on the risk/aggression scale.

For that type of trade, I’m usually looking for contracts that are liquid, responsive, and priced in a range where the stop does not become absurdly tight.

Contract Price

In general, I like contracts in the $0.40 to $0.80 range.

That is usually my sweet spot for short-term day trades, assuming there is strong volume and open interest.

This applies most often to 0DTE index options and weekly expirations on individual equities.

The reason is simple:

I want enough premium for the contract to move, but not so little that every penny becomes a massive percentage move against me.

Expiration and Theta

With 0DTE, risk increases as the day goes on.

The later it gets, the more theta starts working against you. Contract value can decay very quickly, even if the underlying move is not dramatic.

If it is late in the day and the pace feels too aggressive, one simple adjustment is to look at the next day’s expiration.

That can help reduce the intensity of the trade.

How To Reduce Aggression

If you want to be less aggressive, you can generally do that by:

- Choosing a later expiration
- Going closer to the money or deeper in the money. - Selecting a higher quality contract with more intrinsic value
- Avoiding extremely cheap, low-probability contracts
- Deeper ITM contracts usually carry more intrinsic value and less pure theta/IV exposure.
-Cheap, far OTM contracts are often more like fliers.

Why I Avoid Very "Cheap" Contracts

Once you get under $0.30, and especially near $0.25, the trade becomes extremely tight.

Example:

You buy a contract at $0.25.

If the bid is $0.24, you are already down $0.01 on the spread.

That one penny is a 4% move.

If your stop is 10%, you are already almost halfway there the moment you enter.

This is why cheap contracts can be deceptive.

They look inexpensive, but the percentage movement is massive.

A one or two penny move can stop you out quickly.

The Flier Trap

A $0.25 contract can become $0.16 very quickly on a 0DTE move.

That is a 36% loss.

If you entered that trade prepared for it to be a flier, fine. That is a defined strategy 👍

But deciding it is a flier after it moves against you is not strategy 🙅‍♂️

That is usually just an attempt to justify your bad entry.

Fliers should be rare, calculated, and sized properly.

They are high-risk, low-cost trades where the upside must be clearly asymmetric.

My General Preference

To recap:

I generally prefer the $0.40 to $0.80 contract range for day trades.

Time of day matters heavily with 0DTE.

There comes a point where theta erodes value too quickly and changes the risk calculation.

Risk can be adjusted through:

Contract price
Strike selection
Expiration date
Delta
Liquidity
Time of day

The small details matter.

Tip I Share With Insiders Trading My Live Stream Signals:

Is 0DTE moving too fast for your comfort level?
That's OK - everyone has a different threshold.

If IV moves are shaking you out, or the action feels too volatile, look at next-day options.

There is nothing wrong with reducing the speed of the trade. The goal is not to prove how aggressive you can be. The goal is to execute well.

Final Thought

No FURU nonsense aiming to for unrealistic targets.

No random contract chasing.

No emotional “it’s a flier now” excuses after the trade goes against you.

The goal is to be prepared, professional, and consistent.

Contract selection matters.

Strike selection matters.

Theta matters.

Liquidity matters.

Stops matter.

The small details are often the difference between a controlled trade and a panic trade.

These are the general protocols I use myself and that Insiders are provided as well.

If this was helpful, bookmark it for reference and share with others.

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@jgrod85

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