The 0DTE broken wing fly

When I want to trade an intraday directional view, I tend to reach for a 0DTE broken wing fly.

A few reasons.

Say I think we're oversold and due a bounce. The fly gets me leverage to that view for very little premium.

It also bleeds slowly enough that I can ride it for a couple of hours. I don't need the bounce in the first ten minutes for the trade to still be alive.

And I can lean it against any big gamma walls on the 0DTE map, the levels where dealer hedging would likely kick in. If there's a wall above us, that's a sensible place for the body of the fly, because it's roughly where I'd expect the move to run out of steam anyway.

The maths is simple.

Say I spend $200 on it. If I'm wrong, I'll lose $100 and stop out. If I'm right, the payoff can be a multiple of what I paid.

Regular readers might spot something here. A couple of weeks ago I said I generally don't use stops on long option positions. Intraday is the exception for me, because the view itself only lasts a couple of hours. If the bounce hasn't shown up by then, the reason for the trade has gone, and that's when I get out.

Compare that to doing the same thing with futures. You're relying on a level holding, your risk depends on where you put the stop and whether it gets hit on noise, and you've got no structure helping you around the gamma levels. I think the fly is far better for this, in my view anyway.

How I turn a short-term directional hunch into a trade with a known cost and a known exit is one of the things that have been it as part of my framework. Parts of my framework are revealed for free below.

Free 60 minutes:

Watch my free masterclass (exclusive for serious option traders)

If you want to skip the masterclass and jump straight into our course, the Options Insight Advantage, this is the link.

Jump straight into our course, the Options Insight Advantage