Axe Options – ORB Deep Dive 2024

Learn an easy, profitable, and straight forward 0DTE strategy using the Opening Range Breakout.

Axe Options – ORB Deep Dive 2024

This is a simple ORB strategy with 0DTE option credit spreads on SPX, that Arianne Gomez traded in 2024, with a +386% calculated if she had started with $5000 capital.

Learn an easy, profitable, and straight forward 0DTE strategy using the Opening Range Breakout.
The opening range breakout (ORB) strategy with 0DTE (zero days to expiration) option credit spreads on SPX is a day-trading approach that capitalizes on the market’s initial momentum. This strategy is used to take advantage of the high volatility that often occurs during the first 15 to 60 minutes of the trading day.

Strategy Components

Opening Range: This is the price range defined by the high and low of the SPX during a specific timeframe after the market opens, such as the first 15 or 30 minutes.
Breakout: A breakout occurs when the SPX price moves above the opening range high or below the opening range low. This breakout serves as a buy or sell signal for the day’s potential trend.
0DTE Credit Spreads: A credit spread is an options strategy where a trader sells a premium to generate income while simultaneously buying another option to limit potential losses. Using 0DTE options means both contracts expire on the same day the trade is initiated, eliminating overnight risk.
Call Credit Spread: If the SPX breaks below the opening range, a trader might sell a call credit spread, which profits if the market stays below a certain level.
Put Credit Spread: If the SPX breaks above the opening range, a trader might sell a put credit spread, which profits if the market stays above a certain level.

Implementation and Profitability

Traders using the ORB strategy typically wait for a candle to close outside of the opening range to confirm the breakout before entering a trade. The goal is to collect the premium from the credit spread as the options expire worthless at the end of the day. The use of 0DTE options on SPX is popular because they are cash-settled, meaning there is no risk of being assigned shares of the underlying index.
The profitability of this strategy can vary significantly. While some sources suggest this type of strategy can be profitable, others caution that 0DTE options are highly volatile and complex, requiring strong risk management. The profitability claims, such as the +386% with a starting capital of $5,000, are associated with a specific trading course and are not a guaranteed outcome. It’s crucial for traders to understand the risks involved before attempting such a high-risk, high-reward strategy.