How to Trade 0DTE Options Systematically

0DTE (zero days to expiration) options — especially on the SPX index — offer short-term trading opportunities with no overnight risk.
They can also be highly volatile, with prices moving quickly in response to intraday market shifts. Without a structured approach, this volatility can lead to inconsistent results and large losses.

A systematic approach means defining every step of your trading process in advance — from entries and position sizing to risk management and exits — and following these rules without exception.

---

1. What “Systematic” Means in 0DTE Trading

Systematic trading removes subjective decision-making. Every trade follows predefined rules based on measurable market data.

Advantages of a systematic approach:

• Results are consistent and repeatable
• Strategies can be tested on historical data
• Risk is controlled through preset limits
• Decisions are made based on rules, not emotions

---

2. Define Your Objective

Before choosing a strategy, decide what you want the system to achieve and how you will measure success.

Examples:

• Consistent daily income with controlled drawdowns
• Exploiting high implied volatility days for premium collection
• Taking advantage of intraday directional moves

Your objective will guide:

• Strategy type (credit spreads, iron condors, straddles, etc.)
• Entry timing
• Risk tolerance

---

3. Choose a Strategy Framework

Different strategies perform better in different conditions. Select one that fits your objective.

Examples of 0DTE strategies:

• Iron Condor — Sell OTM call and put spreads for range-bound conditions
• Short Strangle — Sell OTM calls and puts for higher credit but more directional risk
• Directional Spread — Buy or sell vertical spreads when anticipating a strong move

In GreeksLab, you can define these structures using delta targets, strike offsets, OTM%, or fixed premium selectors.

---

4. Define Entry Rules

Entries should be objective and testable.

Parameters to specify:

• Time of entry — e.g., 9:31 AM after the market opens
• Strike selection — e.g., short legs at 16 delta
• Market filters — e.g., enter only if VIX > 20

---

5. Build Risk Management Into the System

Because 0DTE positions can move rapidly, risk controls must be part of the rules.

Common methods:

• Stop-loss — e.g., exit if loss reaches 200% of credit
• Profit target — e.g., close when profit reaches 50% of credit
• Time-based exit — e.g., close positions before 3:30 PM
• Position sizing — risk no more than a fixed % of account per trade

GreeksLab’s management rules allow you to set these conditions and backtest them historically.

---

6. Backtest the Strategy

Before trading live, test the rules on historical intraday data to evaluate:

• Win rate
• Average profit and loss
• Maximum drawdown
• Performance in different volatility levels

GreeksLab uses 1-minute CBOE SPX options data with slippage and commission modeling for realistic results.

---

7. Validate With Out-of-Sample Testing

To avoid overfitting:

• Reserve a separate date range for validation
• Use walk-forward testing, rotating in-sample and out-of-sample periods

---

8. Monitor and Adjust Based on Data

After going live, track:

• Performance by volatility regime
• Fill quality compared to backtests
• Consistency of risk/reward metrics

Adjust rules only if data supports the change.

---

Summary

Systematic 0DTE trading means defining clear, testable rules for entries, management, and exits — and applying them without deviation.
With GreeksLab, you can design these rules, test them on realistic 1-minute SPX data, and evaluate their performance across different market conditions before trading live.