TRADING CASH SETTLED OPTIONS ON TOS
Cash-settled options are settled at expiration for cash equal to the option’s intrinsic value. I frequently trade the SPX and NDX, using spreads for 0DTE options.
I will especially trade these if we have appointments or are going to be away all afternoon?
For these I’m looking for an established high, or low, that might take place around noon, or early afternoon, on one, or both, of these index products.
At a probable high/low I will first buy an opposite direction ATM ten-point spread but only if I can buy at $4.50 or less. I will then buy an ATM ten-point opposite spread also for around the same price (always less than $5). Then I leave and let them run through close. I first place the PDS (Put Debit Spread) at a high, or a CDS (Call Debit Spread) at a low, then put the opposite trade in place.
In the above scenario I would only lose money if the trade pinned at the level the spreads were bought which would be an unusual close for the volatile NDX or SPX. Usually, one spread will end fully ITM at close. The fully ITM spread would be worth $6 (if purchased at $4) while the OTM spread would cost $4, (or the amount paid) leaving a credit of approximately $2 (actually $200/contract less costs and is usually a winner 100% of the time)? I will usually trade 2-4 contracts at a time. As you can see these two trades become an ATM Straddle. This type of trade also works with SPX or any other option that cash settles at end of day. The SPX can also be traded as a $5 spread which I would want to buy at $2 or less giving a smaller profit potential.
I also trade these during the day when at home during market hours. In that case I would buy an appropriate PDS or CDS for around $4 and watch it the same as any other trade. I may place a GTC or just watch for another turnaround before closing the trade. If it is ITM a respectable distance I may let it ride and cash settle for the approximate $600/contract profit.
How would I defend this trade if the market turned against my trade. If the original trade was a PDS I would buy a CDS at the same entry point as I entered the PDS for hopefully at $4 or less (always less than $5 on a ten-point spread) to form an ATM Straddle.
Yesterday (3/23/26) at 11:15 A.M. my 5 min chart showed a SHORT BUBBLE on NDX which was slightly lower than its previous high and so I entered a 24410/24400 PDS for 4.01 for two contracts and let it sit to hopefully fill. It filled for my 4.01 price at 11:24. Because it was well ITM and I had to leave at 2:00 for an appointment I left it as is. It cash settled for full value at market close for $1,198 (a good ROI). As I look back at the chart for the afternoon there were a probable two other trades at 1:25 and/or 3:00 although my first trade closed fully ITM.
You might want to give one of these a try?
Cash-settled options are settled at expiration for cash equal to the option’s intrinsic value. I frequently trade the SPX and NDX, using spreads for 0DTE options.
I will especially trade these if we have appointments or are going to be away all afternoon?
For these I’m looking for an established high, or low, that might take place around noon, or early afternoon, on one, or both, of these index products.
At a probable high/low I will first buy an opposite direction ATM ten-point spread but only if I can buy at $4.50 or less. I will then buy an ATM ten-point opposite spread also for around the same price (always less than $5). Then I leave and let them run through close. I first place the PDS (Put Debit Spread) at a high, or a CDS (Call Debit Spread) at a low, then put the opposite trade in place.
In the above scenario I would only lose money if the trade pinned at the level the spreads were bought which would be an unusual close for the volatile NDX or SPX. Usually, one spread will end fully ITM at close. The fully ITM spread would be worth $6 (if purchased at $4) while the OTM spread would cost $4, (or the amount paid) leaving a credit of approximately $2 (actually $200/contract less costs and is usually a winner 100% of the time)? I will usually trade 2-4 contracts at a time. As you can see these two trades become an ATM Straddle. This type of trade also works with SPX or any other option that cash settles at end of day. The SPX can also be traded as a $5 spread which I would want to buy at $2 or less giving a smaller profit potential.
I also trade these during the day when at home during market hours. In that case I would buy an appropriate PDS or CDS for around $4 and watch it the same as any other trade. I may place a GTC or just watch for another turnaround before closing the trade. If it is ITM a respectable distance I may let it ride and cash settle for the approximate $600/contract profit.
How would I defend this trade if the market turned against my trade. If the original trade was a PDS I would buy a CDS at the same entry point as I entered the PDS for hopefully at $4 or less (always less than $5 on a ten-point spread) to form an ATM Straddle.
Yesterday (3/23/26) at 11:15 A.M. my 5 min chart showed a SHORT BUBBLE on NDX which was slightly lower than its previous high and so I entered a 24410/24400 PDS for 4.01 for two contracts and let it sit to hopefully fill. It filled for my 4.01 price at 11:24. Because it was well ITM and I had to leave at 2:00 for an appointment I left it as is. It cash settled for full value at market close for $1,198 (a good ROI). As I look back at the chart for the afternoon there were a probable two other trades at 1:25 and/or 3:00 although my first trade closed fully ITM.
You might want to give one of these a try?
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