The author's backtesting of an automated 0DTE SPX credit spread strategy showed that using stop losses consistently underperformed a strategy without them. Stops locked in losses on positions that often recovered by the end of the day. This suggests that the intraday volatility of SPX makes tight stop losses on short-premium 0DTE strategies counterproductive. The author's revised, more "robust" strategy involves forgoing stops, selling higher delta spreads, and accepting a predefined maximum risk (30% of capital). The author advocates for a specific approach to selling 0DTE SPX credit spreads: no stop losses, higher delta strikes, and a fixed risk percentage. This is presented as a more robust system than trying to sell very low delta spreads with stops. This strategy carries extreme risk. A "no stop loss" approach on a 0DTE spread, even with a predefined capital risk, can lead to catastrophic, account-wiping losses in a black swan event or a sharp, sustained intraday trend. Backtest results may not reflect real-world execution (slippage, fills).
TLDR
=== SUMMARY ===
- The author details their experience backtesting an automated 0DTE SPX credit spread strategy, focusing on the ineffectiveness of stop losses.
- The author's thesis is that for their specific strategy (selling 0DTE credit spreads based on opening range breakouts), stop losses introduce more problems than they solve, leading to locked-in losses on positions that would have recovered. They conclude that a better approach is to sell higher delta spreads, risk a fixed percentage of capital (30%), and forgo stop losses entirely.
- Quality assessment: This is a personal account of a backtesting experience, not well-researched due diligence (DD). It offers insights into the challenges of a specific, high-risk trading strategy but should be considered anecdotal evidence rather than a universally applicable conclusion.
=== SENTIMENT ===
NEUTRAL
=== TRADE IDEAS ===
SPX - AVOID | confidence: 0.75 | sentiment: +0.00
Speaker: u/Right_Business9301
Thesis:
1. THE FACT: The author's backtesting of an automated 0DTE SPX credit spread strategy showed that using stop losses consistently underperformed a strategy without them. Stops locked in losses on positions that often recovered by the end of the day.
2. THE BRIDGE: This suggests that the intraday volatility of SPX makes tight stop losses on short-premium 0DTE strategies counterproductive. The author's revised, more "robust" strategy involves forgoing stops, selling higher delta spreads, and accepting a predefined maximum risk (30% of capital).
3. THE VERDICT: The author advocates for a specific approach to selling 0DTE SPX credit spreads: no stop losses, higher delta strikes, and a fixed risk percentage. This is presented as a more robust system than trying to sell very low delta spreads with stops.
4. RISKS: This strategy carries extreme risk. A "no stop loss" approach on a 0DTE spread, even with a predefined capital risk, can lead to catastrophic, account-wiping losses in a black swan event or a sharp, sustain
Key Points
['Stop losses on 0DTE credit spreads can be counterproductive.', 'They often trigger on recoverable intraday moves.', "Author's alternative: no stops, higher delta, fixed risk.", 'This is an extremely high-risk strategy.', 'Backtest results showed this revision was more "robust".']
February 24, 2026 at 01:03