A pre-market decline in crude oil futures ($CL) is observed, often linked to news of geopolitical de-escalation between the US and Iran. Lower oil prices are interpreted by the market as a positive sign for the economy (lower inflation, higher consumer spending), leading to a relief rally in the S&P 500 at the market open. Buy 0DTE SPX call options at market open when oil is down pre-market and other filters (news, options flow, gamma) are supportive. Aim to capture the initial upward momentum and exit within the first 30 minutes to mitigate theta decay. The correlation between oil and SPX could break down. The geopolitical situation could change rapidly, invalidating the premise. 0DTE options are extremely high-risk and can expire worthless. The strategy's observed 83% win rate is based on a small sample size and may not be sustainable.
A pre-market decline in crude oil futures ($CL) is observed, often linked to news of geopolitical de-escalation between the US and Iran. Lower oil prices are interpreted by the market as a positive sign for the economy (lower inflation, higher consumer spending), leading to a relief rally in the S&P 500 at the market open. Buy 0DTE SPX call options at market open when oil is down pre-market and other filters (news, options flow, gamma) are supportive. Aim to capture the initial upward momentum and exit within the first 30 minutes to mitigate theta decay. The correlation between oil and SPX could break down. The geopolitical situation could change rapidly, invalidating the premise. 0DTE options are extremely high-risk and can expire worthless. The strategy's observed 83% win rate is based on a small sample size and may not be sustainable.