Options can be a great way to profit from a move in a stock.

That’s why I’ve used them extensively throughout my 40-plus-year career.

But they can be confusing when you’re not used to them.

After all, the underlying stock of an options contract can move… but the option itself may not behave as expected.

Perhaps it stays flat… or even goes the other direction!

So new options traders need to understand two concepts that can help them keep their options trades on track.

Today, let’s discuss them… and show how they are playing into the power of “zero-day” options trading…

Gauging an Option’s Sensitivity

Options “Greeks” measure different factors that can affect the price of an options contract. In essence, they help you figure out an option’s risk profile.

Delta determines how much an option should increase (or decrease) based on a move in the underlying stock. Specifically, it tells you how much the option price should move for each $1 move in the underlying stock.

For example, a delta of 0.5 tells you that a call option should increase 50 cents for every $1 move higher in the stock price… or increase $5 in value for a $10 rise in the stock.

Conversely, if the stock price fell by $10, you’d expect the call option to lose $5 of value.

However, delta has limitations if you use it in isolation. An option’s delta constantly changes. And the rate of that change can vary.

That’s where gamma helps fill in the picture.

Gamma gauges how sensitive an option is to movements in the underlying stock. The higher its gamma is, the more sensitive the option’s price is to moves in the stock price.

For someone buying an option, this can be a great benefit… Higher gamma means that the delta could increase even if there’s only a small move in the stock price.

Gamma is at its highest when the stock price is at or near the option’s strike price.

And critically, gamma increases the closer the option gets to expiry – especially on expiration day.

That’s where 0DTE – or “zero days to expiration” – trades can come into play…

Putting Gamma to Use

0DTE has been rapidly gaining in popularity in recent years. It accounts for more than half of the options activity tied to the S&P 500 (SPX) these days.

Put simply, 0DTE is when you open an option position that expires the same day.

And as I’ve been sharing… gamma can turn these trades into massive winners.

Because there’s such a short time until expiration, gamma can be near its highest point. And that means an option’s value can soar 100% in less than a day, for example. (Some people have even seen much higher returns, like 500% or more.)

That’s how these trades can transform your portfolio in such a short window.

Of course, these trades aren’t without risk… If you don’t get the move you’re looking for, there’s little time to see a recovery.

That’s why I want to walk you through all the details regarding how these 0DTE trades work… and put my 40 years of options expertise to work on your behalf.

So if you haven’t signed up for tonight’s AI Overnight Gains Summit yet, please don’t waste any time. For just a little while longer, you can still add your name to the guest list with one click.

I hope you’ll join me tonight at 8 p.m. ET for the full story on 0DTE… and how AI’s big moves can give us one of our best chances to profit in the months ahead.

See you soon!

Regards,

Larry Benedict
Editor, Trading With Larry Benedict