Mistake during 0DTE SPX call spread

[vintrader]

 

Sold a SPX call credit spread (6685/6700) for a net credit of $0.40 ($0.67 - $0.27) with same-day expiration (Oct 17).

SPX was around 6645

I opened a "Buy to close" for SPX6685 with a stop price of $2:00. At around 2:10 PM, When the SPX touched 6658, the SPX6685 Call was around $1.8. I was not ready to loose money so I canceled my order. I was glued to the screen just hoping that SPX won't rise any further. It went to 6672 at around 3:10 PM and the SPX6685 Call was around $6.00 at that point. I was down almost $550 at that point. SPX came back to 6664 and my SPX6685 call was around 1.3. I was happy that I dodged a bullet but knew I was very stupid. Later around 3:20 PM, SPX went to 6678.88 and the SPX6685 call was back to $4. Still I didn't do anything. Was just hoping the day will end somehow. For next 40 mins, SPX hovered around 6670.

 Somehow, I ended the day without a loss with SPX at 6664.

 What should have been my strategy? When should I have closed my position and how much risk should I take? Any better strategy for same-day expiration SPX spread?

 

[Kim]

A better strategy would be not to trade options that expire the same day. Extremely risky.

[TrustyJules]

12 hours ago, vintrader said:

 

Sold a SPX call credit spread (6685/6700) for a net credit of $0.40 ($0.67 - $0.27) with same-day expiration (Oct 17).

SPX was around 6645

I opened a "Buy to close" for SPX6685 with a stop price of $2:00. At around 2:10 PM, When the SPX touched 6658, the SPX6685 Call was around $1.8. I was not ready to loose money so I canceled my order. I was glued to the screen just hoping that SPX won't rise any further. It went to 6672 at around 3:10 PM and the SPX6685 Call was around $6.00 at that point. I was down almost $550 at that point. SPX came back to 6664 and my SPX6685 call was around 1.3. I was happy that I dodged a bullet but knew I was very stupid. Later around 3:20 PM, SPX went to 6678.88 and the SPX6685 call was back to $4. Still I didn't do anything. Was just hoping the day will end somehow. For next 40 mins, SPX hovered around 6670.

 Somehow, I ended the day without a loss with SPX at 6664.

 What should have been my strategy? When should I have closed my position and how much risk should I take? Any better strategy for same-day expiration SPX spread?

 

The better strategy is to understand gamma. Option trading in most circumstances is not rocket science and just playing percentages but the one thing that absolutely rips any strategy is gamma. When you have 0 dte trades gamma is sky high - I have a higher tolerance for it than Kim but I respect his point of view. If gamma moves against you and there is barely any time to expiry there is nothing you can do to control the outcome except pray.