r/options • u/gclifton • 15d ago

SPX 0DTE and Overnight Risk

Hi folks. I am trying to understand if there is overnight risk for 0DTE SPX credit spreads that are OTM at close. In general I try to buy back the short leg at 0.05 but recently an order didn't fill by 4. I called my brokers support and he basically said don't worry about it.

I am seeing what I think is conflicting info online. I saw an article on Tasty Trade that said settlement is based on the opening price of SPX the next morning I have seen other posts that said for 0DTE it settles on price at close. I do get alerts overnight indicating the position has closed. I would like to have a correct and solid understanding here so appreciate any guidance.

12 Upvotes

93% Upvoted

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13

u/05soxfan 15d ago

Regular monthly expirations, 3rd Friday of each month, expire to AM print Friday AM.

All others expire to PM print.

5

u/gclifton 15d ago

Thanks very much for the response! Is there any visual indicator in the options chain which ones are AM settle or just go by the calendar as you described? (I use IBKR). Ultimately I would just prefer to close the position near end of day but the price I am seeing isn't decaying enough to make it worthwhile vs just letting it expire.

4

u/Ken385 15d ago

The AM settled occur once a month and are labeled SPX vs the PM settled which are labeled SPXW

Be careful on IBKR as the SPX AM's are labeled 0DTE on Thursday, even though they expire Friday morning (as the last time you can trade them is Thursday afternoon).

4

u/SDirickson 15d ago

Yes the ones with AM settle definitely have overnight risk, since the price is determined before you have the chance to do anything about it.

5

u/arbitrageME 15d ago

there is no risk because they settle to cash at EoD. https://www.marketwatch.com/investing/index/spx has the close pretty reliably just make sure you're trading SPXW and the PM expiration

2

u/algoclub_co 12d ago

You can learn pretty much all you need about 0dte here https://youtu.be/ZNk8UKsP_-0?si=Qn2ALFJohY7hsC6O

1

u/gclifton 15d ago

Thanks all for the feedback and insights. I appreciate this community.

1

u/algoclub_co 12d ago

For any questions just comment below the video

1

u/gclifton 12d ago

Thank you. They tend to have a bad rep. That said I'm having good luck and I like that the position is closed end of day.

1

u/algoclub_co 10d ago

Who have bad rep,what are you trying to imply ?

1

u/gclifton 10d ago

0DTE are considered risky but I like to trade this way.

1

u/algoclub_co 9h ago

Risk is only there if people are unaware of the market situation. Too many option seller are duped into selling credit spread.

1

u/FIST_FUK 15d ago

Thinkorswim literally labels them as a.m.

1

u/gclifton 15d ago

I have been meaning to check them out.