Now I have no clue why, but I decided to make a new type of a video today. This video will be more of a Trading journal esque type of a video. I want to explain how I was degenerately trading zero DTE options today making just over $600 while risking in the realm of 2000. What I want to do in this video is break down all my reasoning why I got in, how I decided to manage and why I decided to get out.

My point in doing this is to shed a little bit of light on what it's like to actually be a degenerate Trader So I hope you can learn a thing or two and obviously if you notice something throughout the video where I can be improved I would love to learn from you so don't hesitate to leave a comment below. With that being said, let's rock. By the time the closing bell when dingy ding dingding today here was the official headline: Dow closes higher Tuesday as hope grows that the FED is done raising rates. So even though the market did look pretty good and here's a snapshot of the S&P 500 little red, little little green, little Christmy but you could see that the green does dominate I Ended up myself taking some bullish positions.

but I think the titles and this picture right here make it seems like maybe it was a little bit easier of a day because there was a decent portion of the day where I was forced to White Knuckle my own position which I think that's an important thing to talk about. it's one thing to make money, but I think there's almost an emotional Capital aspect that should be considered was a money made easily or was it more of an emotional type of a battle. and like I said portion of today I was sweating. But before we get into all that, I do want to give you a very quick update on a piece of sad news.

It was just reported that Charlie Munger investing genius and Warren Buffett's right-hand man has passed away at the age of 99 now I'm in no way saying that I always agree with Mr Monger but obviously he's an OG investor who's proven himself time and time again. And on top of that, if you look at some of his historic comments and quotes, the dude is a top tier comedian so obviously hats off to his amazing career and and his family is definitely in my thoughts. All righty. To kick this all off, you need to know that I made two major trades today.

Both were credit spreads. More specifically, put credit spreads. Now if you've never heard of that before, if you have, but you really don't know what it means, I'll be explaining that in a second. Yes, it's technically an advanced options trading strategy, but it's one of those things that if you do it once or twice or watch a couple videos here or there on the interwebs, you're going to understand it.

Don't let people in the world of retail trading education make things seem more complicated than they actually are because in all reality they just like to feel better about themselves. And I think we could get the major aspects of what credit spreads are specifically put credit spreads fully explained and understood in this video so very quickly. The first trade of the day came at 1115 and that's where I put on a put credit spread 4550 spread by 45 little bit later in the day and I'll be explaining this in far better detail where I started to get concerned about my position around 120. I ended up picking up a whole another position.

so I entered into two different hook credit spreads. then a little bit later that second one that I got into I was able to actually take the profits around 315 and then at the end of the day I was able to close the first position and I did that with about a minute later. So I just wanted to show you the time and sales of everything. the prices feel free to screenshot this, do whatever you want, but this is my real account you can see I made it technically was 640 and then there was really $12 worth of commissions.

but I just wanted to show you the two entries, proof of the two entries and then the two exits. and obviously proof of the two exits. Now with that happening, let's actually go over to the chart and I'll kind of explain what these trades mean and how I was able to make this money. For those of you who don't know if you're on trading view, there's actually a really cool replay tool so instead of looking at how the entire game played out, you could kind of revert to a certain point in history and then play it out there in real time, which I actually personally think is a far better way to learn about the market.

Anyway, when the first 15-minute bar of the day opened, things weren't the best technically SPX the S&P 500 00 gap down, and from there it didn't really improve all that much. A little bit more bearish, a little bit more, but kind of sideways at 10:00 A.m. things started to turn a little bit because we got the consumer confidence report and on top of that, there was a revision for the previous one and the consumer confidence levels went down and we're in this weird situation where bad economic updates are actually good for the market, and that's just because of monetary policy currently trying to fight inflation, but that's the subject matter for an entirely different thing video. But my point is, at 10:00 a.m.

at this point, things were going sideways. I didn't really feel strongly bullish or bearish I was waiting for something to happen and I was very, very much paying attention to this potential upside: Gap fill. From really the low of the closing bar of yesterday to this Gap that we were clearly seeing today, maybe the air was not the best way to Showcase it, but this is what I was looking at I was thinking ooh, is this going to get filled and if so, can I take advantage of that particular play. Unfortunately, as you're about to see, as soon as we started to fill it and this was really when I was getting particularly excited cuz the report settled and I knew yes that there were going to be some fed speakers to listen to and I was like I don't think they're going to mess it up too much I was very interested in playing this and seeing if there was going to be a follow through, but as you're about to see it went and it went quickly.

When this thing popped, it was a runaway train I did not have my position so the ideal entry was sometime between 10:15 10:30 early and as you saw from the proof of my first entry, I didn't get in until about 11:15 and my reasoning was wow, this really really ripped I should wait for some sort of pullback just because I wanted Superior risk to reward and that's exactly what I did I waited I was like okay, pull back I like that I like that looking for a little bit more, not really getting it more, so sideways and then this was the point where I was like uh-oh this isn't pulling back at all, this is actually about to break out. So as you can see and right here I'll show you one more time time. But my first trade was 1116 and right here SPX 4550 4545 Now obviously both of these legs put together were one play. Let me just quickly explain what I did at this time I was like wow, we're actually going to break out, we could rip.

So what? I ended up doing my trade of the day and I'll try to put this right under the time 4550 I Ended up selling this particular strike this particular option. so I sold it at 4550 and then you're just forced to do this in terms of protection. and like most brokerages aren't even going to allow you to place the trade without protection cuz then you're just selling Naked Premium. So really I'll just make this red.

So you know that I sold this particular one and then for protective purposes I had to buy this. But really, what does this bet mean? It just means by the end of the day because I was playing it on the Zero DT I bet, we're above 4550. That's all the BET means it's biner. If you're above it, you win.

If you're below it, you lose. It's not really in the world of options where you want it to go more up if you have a call or more down if you have a put. When you're playing credit spreads, think about it as like the over and under in sports gambling. So this is a put credit spread I sold the 4,550 I bought the 4545 and remember this bottom one.

the green one that I bought. it's just for protection purposes And then this one up here is actually like the Line in the Sand where I want it to be above that now obviously just for I guess educational purposes. If it was a call Credit spread, you would want it below the one that you sold. Uh, but maybe we'll talk about that a little bit later.

So here at 1116 technically I thought hey, good chance that we're going to be above this by the end of the day and when I ended up placing that I received 95 cents in credit AKA $95 If I'm right, that would be my maximum reward and because of that, this was a high odds play. If you look at the Delta on the option chain for that moment in time time, it was in the realm of like 20, maybe 15. As in saying I had an 80 to 85% chance of this paying off for me. So I had high odds and yes, you could argue that it's asymmetric of the risk versus reward I'm risking more, but also, the chance of it happening is considerably higher.

So I was willing to take that bet and I was feeling pretty good and then I was still feeling pretty good and then I thought to myself, oh, consolidation is okay, don't worry about it and then I thought okay it, it's still consolidating and then I thought wow, this consolidation is starting to look a lot like maybe it's coming back down and I was like all right, this is the worst consolidation I ever saw. This is getting really close to that line that I particularly needed Above This is the point that I started sweating I was I was profusely sweating at this point and then this is when I went from sweating to crying. and obviously as you know from the second trade, I decided to make a second trade at 120. So let's just bring it up to that particular bar cuz it kept getting worse, kept getting worse and it was somewhere in this particular time block 120 where as you can tell, we went below the level that I needed above and even my protection for a split second was underwater and it was that Split Second that it was under water that I ended up adding another position and this one was right here 4,540 and then obviously once again just for protection I would need it at 4,535 So let me just make this one red.

The one that you sold when you're talking about put credit spreads you want it above the one that you sold. and if you're talking about call Credit spreads you want it below the one that you sold. So in this particular example, I have two put credit spreads. the red line is where I had it sold.

That's what I wanted at above and the green line is simply forced upon you if you want to place these trades at all cuz they don't want you to blow out your account. So this second one, the credit that I received was 75 AKA $75 Once again, just so you guys know, the first one was 95 cents AKA $95 which means my risk was $405 and then for this particular one the other one, it was $475 So just trying to give you the math of the situation. once again, the risk reward was a bit asymmetric. If I was wrong, the loss would be quite a bit greater, but that's technically the max risk.

I is obviously going to manage it earlier about half of that. So I think it's important to give you the details of the theoretical Max risk and then also mentally where I was at. Basically I was going to LIT it ride up about to 250 in at 95 out at 250 if it went against me in at 75 out at 250 if it went against me when you're selling premium, you want it to Decay to zero. You don't want it to go up.

So whenever you thinking about buying a call, buying a put you want it higher and higher and higher. When you're selling premium, you want it to go down to zero as quickly as you possibly can. Anyway, back to this: this particular trade around 115 120 I figured hey, if this one blows out when it was around 4545, that was the point where was around 250 and I was like really close to cutting it and I thought to myself, stay calm, all right, things might be bad and really all the sell off got particularly bad at 1 p.m. because there was a bond auction update for the 7-year Bond and the yields came in a little bit higher and then people were like uh-oh is there more distress returning to the world to fix income But I thought to myself hey, out a sight out of mind, let's throw on another trade and then turn off the charts and see how things play out because that's how a good degenerate does it.

Anywh, who for protection I sold the 4,540 and obviously this bet is just saying hey I think it's going to be above it and I was about to take this one off basically taking a hit. uh I sold it at 95 I was going to buy it back at 250 obviously taking a hit. uh, a little bit more than I wanted. but I figured hey, if I get the 75 cents on here I cut my loss in half and that's what what this game is all about all about risk mitigation.

So at this point I now have on two positions and I decided to LIT it ride and I was like H cuz I I needed it above both red lines for both to hit. Basically the higher it was, the better was off it was going to be. and this thing looked like Not Only was it going to plummet once again through my first classic dead cat bounce, but I started to freak out that maybe both were going to get knocked. Not good.

And really at the start of the video when I was saying I was technically risking $2,000 Well, $250 on each? That's $500 and then obviously I had multiple of these. so that's basically the math there. But anyway, I was sweating again. it's 2:30 and I looked down, all the alerts on my phone started to go off and then I got a pop.

A very lucky pop to the point that it l above it I was like okay, great. So this is the point in the day where I was thinking to myself maybe appropriate to actually start taking some profits. So the second one that I got into at at this point because of Theta, it had decayed so much that I was able to capture it around 35ish. and you can see here the differential was 5 Cent So I sold it for 75 cents and then I was able to buy it back at 5 cents making 70 of the max 75 which is about a 93% capture rate and then really all I was doing is back to babying the first position.

So I had already like kind of mitigated my potential losses. so I was happy with that and then really I would argue that maybe just Lady Luck by the end of the day was particularly on my side cuz we were coming close to not looking good at all and then kind of arguably right at the last second we started to pop and then that's exactly why at the end of the day, right around 400 p.m. you could see this right here. Uh, 358 I was able to close the final one out for 5 cents.

So a quick recap on really everything that happened at 11:15 I sold a put credit spread on the Spy wanting it above the higher value of 4550 and I collected 95. So that's my Max potential return on that particular trade. A little bit later, things went against me. so I went further down the trade and I thought okay, if it's not going to be about 4,550 maybe it'll be above 4,440 later in the day, that one looked much more reasonable.

so I was able to close that out at 5 cents that one I got in at 75 so captured about 93% there and on the other one I have the math when got of this one at 5. So from 95 down to 5 capturing 90, that's about a 94 95% capture rate. So yes, I did this with multiple positions. but like I said, you could either scale this up or scale this down.

So let's just talk about the one unit cost for one unit, your max risk was 830 in reality for one unit. Basically on each of these, I was going to manage halfway. So really risking 500 and the return ended up being $160 so risking 500 per unit for 160. Uh, in terms of return per unit.

And once again, you could scale this up by doing multiple of them or scale it down by doing something smaller if you so choose. Instead of SPX you could trade like XSP Or really, you could trade spy Q's It's more of the concept here and it's up to you to scale it whatever is appropriate for your account. for me. I obviously wanted to risk below 10% of My overall account you can see on the top of the screen here: I'm trading with just over PDT about 30 31k so that's where I came up with the risk management of it all.

but I guess to best explain this in a TLD Drr manner. basically I saw the market going sideways early this morning, started to wake up I wanted to play the upside Gap F went too quickly but I thought things still looked bullish when they started to Cal down I was like great. You're not chasing time to actually get in. Unfortunately, that wasn't just a run-of-the-mill consolidation and continuation, it was actually legitimate selloff.

So I thought to myself, hey, you're going to probably take a loss. Let's cut the loss in half by running further down the train and doing another Po credit spread and then just got really fortunate and there was enough of a pop that both positions ended up being out of the money which is exactly what you want when you're selling premium. So at the end of the day both trades ended up working. It was a little bit of a White Knuckle situation I Just thought it'd be kind of cool to explain my mindset throughout the day.

Show you the trades with their time stamps give you my reason. Obviously if you have any com comary or critiques of how this could be improved I would love to hear from you. and also if you have some questions on what are you talking about with these credit spreads, put credit spreads what is XSP If you have any questions like that, let me know in a comment below. And most importantly, if you enjoy these type of videos more of like in the life of D Gen Trading and like actual updates with an actual trading journal.

If you like this style of video, let me know cuz I would love to make more If that's exactly what you're looking for, that's what I have for you in this one. I'll catch you in the next one. Have a beautiful day.