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Hi everyone – I told myself that 2026 is the year I would take option trading seriously. Over the last 8 years, I've traded options on and off again. I found it hard to stick to a specific strategy given the limited viable backtesting tools (whether cost or features), and generally found myself drowning in information overload. Given the recent increase in quality these tools, as well as the rise of 0DTE platforms, I spent Q4 evaluating a number of strategies that I wanted to stick with. During Q1, I found a 2-trade combo for 0 DTE trading that I committed to trading daily, as well as leave room in my portfolio for discretionary trading for other strategies (CSP’s, Diagonals, etc.,).
The 2-trade combo for 0 DTE is based on overnight VIX changes. The main considerations are:
* Filter - is VIX up or down overnight?
* If up, sell premium
* If down, buy premium
* Stop Losses
* No stop losses. Put trades on and let them run until end of day. Commit a certain % of account size as potential loss vs use stop loss
* Automated entries
* I have a day job. Can’t login and manage trades at open
Creating this set of rules, and not overcomplicating entry filters, made the plan easy to stick to. Having the ability to backtest these strategies since May 2022 gave me additional conviction to stick with the plan. Through Q1, I made sure to run the backtest each week and compare the backtest vs actual to make sure that I was tracking effectively.
My discretionary trades were much less planned out and followed ‘typical’ rules of thumb. For CSP’s, I’d sell puts on stocks I’d like to own after they took a dip not-related to earnings. For Diagonals, I entered long LEAP positions selling 7% OTM near dated calls against it (RIP).
Summary of Q1:
* Starting account balance - $32,286 (mix of cash and VTI shares)
* Ending account balance - $44,347
* Total Trades: 85
* Win Rate: 80%
* SPX 0DTE P&L - $12,246
* Non-SPX P&L - ($1,635)
* Total P&L - $10,611
* Total Commissions - $132.95
* Slippage - I’m keen on tracking this in Q2
Things that went well that were not a surprise:
* Sticking to a plan. I traded 0DTE’s every day. Given the noise in the market & Iran War, I was happy I stuck to the 2-part strategy for the vast majority of my trades. Mid-Q1, I took a look at how the strategies behaved in different VIX environments and made volatility adjusted variations of the strategies that impacted wing width & total credit
Things that went well that were a surprise:
* Portfolio +37% VS SPX -4% QTD. This will now be famous final words for going into Q2.
* My commissions were better than anticipated in the backtests that I had. I overestimated by \~$3.5 per trade
Things that didn’t go well that weren’t a surprise:
* I knew I would let my emotions get to me at some point. I exited 11 trades early this quarter, almost 1 per week. Not terrible, but if I didn’t exit early I would have made money vs losing money on those trades. While I followed my daily entry plan, I need to get better at not having my emotions tied to negative outcomes
Things that didn’t go well that were a surprise:
* The escalation in Iran. While my 0DTE trades benefited from the swings in volatility & intra-day pricing, it definitely hit my diagonals pretty hard
Goals for Q2
* Continue to trade my 2-Part strategy that adjusts with volatility regimes
* Explore additional trades that will compliment my portfolio
* Look for premia that are persistent, pervasive, robust and scalable
* Hedge days where I’ve historically had large drawdowns (selling in the 20 - 25 VIX range)
* Look at VIX1D as an additional measure with VIX30D
* Idk put in werk, make money
Matplotlib pics below with some additional data:
[P&L Over Time. 0DTE in Blue. Disrectionary Trades in Orange. Black Line Cumulative.](https://preview.redd.it/rb1llmtqkosg1.png?width=2048&format=png&auto=webp&s=1de1fdcd114c10b3796bb4f538576de877b54652)
[Daily P&L](https://preview.redd.it/4e7thdavkosg1.png?width=2048&format=png&auto=webp&s=49b33cb71e83a210697ac4268e7be4949a9e126c)
[Backtest vs Actual for 0DTE. Most down days are from manual early exits.](https://preview.redd.it/dl1x8agxkosg1.png?width=2048&format=png&auto=webp&s=da6b68c9bfe6755154f9c2325387c0eda2fca93a)
[P&L by Symbol](https://preview.redd.it/0qshlwe1losg1.png?width=1785&format=png&auto=webp&s=90f44a68f446368cc2127b824c849bbcc264f019)