Can You Really Achieve 5% Monthly Portfolio Growth with the 0 DTE Strangle Strategy?

Can You Really Achieve 5% Monthly Portfolio Growth with the 0 DTE Strangle Strategy?

Many traders are intrigued by the prospect of achieving substantial monthly growth using the zero DTE (Days to Expiration) strangle strategy. But is it truly feasible? Let’s delve into the details to find out.

Firstly, it’s crucial to understand how brokers assess margin requirements for such trades. Typically, they employ a 20% risk array model, which factors in the maximum risk associated with a 20% movement in the underlying asset. Additionally, as the underlying asset fluctuates, the margin fluctuates accordingly. For instance, in a recent example using SPX, the initial margin stood at $100,000. However, if SPX experiences a 10% decline, this margin swiftly escalates to $163,000.

In this specific scenario, we’re focusing on SPX and executing a single call and put option. Despite being a one-lot trade, the margin, based on the 20% risk array, remains at $100,000. Analyzing the risk profile reveals that if SPX remains relatively stable, the trade can yield a modest $250 profit. However, a 10% downward movement in SPX translates to a value at risk exceeding $47,000, while a 10% upward shift exposes a risk exceeding $48,000.

Now, let’s assess the trade’s potential impact on an entire portfolio over 30 days. With a $200,000 portfolio, engaging in one lot generates approximately $250 per successful trade. Assuming an 78% success rate and accounting for losses, this equates to slightly over $3,000 monthly, corresponding to a 1.56% return on the portfolio. Doubling the trade to two lots theoretically yields over 3% returns, albeit with increased margin requirements and associated risks.

To achieve a consistent 5% monthly growth, one would need to significantly increase trade volume, potentially risking a substantial portion of the portfolio. However, this strategy hinges on a high success rate and minimal losses, making it inherently risky.

In conclusion, while the allure of 5% monthly growth is enticing, the risks associated with the zero DTE strangle strategy, especially with a 20% risk array, may outweigh the potential rewards. It’s essential to carefully consider risk tolerance and trade volume before pursuing such aggressive growth strategies.

Unlock your trading potential with SJ Options and the OptionColors platform. Gain a Competitive Edge by leveraging higher-order Greeks and consistently capturing volatility Skews. Elevate your trading skills with a complimentary demo and take your options trading to new heights. Ready for a change? Get started today.

In summary, while achieving 5% monthly growth with the zero DTE strategy is mathematically possible, it entails substantial risks and may not be advisable for all traders. Thank you for watching, and see you in the next video.

recent posts

Unveiling the Truth: Naked Put vs. 112 Strategy in a Market Crash

Unveiling the Truth: Naked Put vs. 112 Strategy in a Market Crash If you’re an options trader, you’re likely well aware of the debates surrounding the riskiest strategies. Today, we’re taking a deep dive into the comparison between the notorious naked put and the intriguing 112 put front-ratio strategy, particularly in the tumultuous waters of […]

Navigating the World of Options Strategies: Ensuring Safety and Success

Navigating the World of Options Strategies: Ensuring Safety and Success In the fast-paced world of options trading, where strategies abound and opportunities emerge and vanish in the blink of an eye, ensuring safety and success is paramount. With a plethora of options strategies bombarding traders from every angle, it’s crucial to discern which ones are […]



0DTE Strangle Strategy, 112 Options Trading Strategy, 1DTE Options, ATM, Bearish Options Strategies, Best Options Course, Butterfly Spread, Calendar Spread, Credit Spread Backtest, Credit Spreads Strategy, Day Trading, Defective Apple iMac, Full Time Options Trading, Greek Charm, Greek Delta, Greek Gamma, High Order Greeks, imac, imac problems, implied volatility, iron condor, IV Rank, James Cordier, Karen The Supertrader, Low Risk Trading, Naked Puts, Option Greeks, Option Strategy, option trading, option trading checklist, option trading lifestyle, option trading mindset, option trading myths, option trading profits, option trading strategies, optioncolors, optioncolors software, options analysis, Options Basics, options course, options learning course, options strategies, options trader, options trading, options trading course, options trading newsletter, options trading performance, options trading software, otm, pop, popular option trades, portfolio margin, portfolio margin trading, probabilities, probability of profit, profitable, review, San Jose Options, san jose options review, scalable, Short Condor, Short Strangle, short strangles, sj options review, spread, spreads, strangle, strategies, tasty trade, tasty trade credit spread, tasty trade credit spreads, tasty trade iv rank, tasty trade ivr, tastytrade, tastytrade credit spreads, tastytrade strangles, tastytrade verticals, technical, testimonial, theta, time decay, trading volatility, unbalanced condor, vanna, vega, Vertical Credit Spreads, veta, vomma, weekly credit spreads, Winners and Losers