0DTE put selling means collecting premium by selling same-day puts, typically on index ETFs or futures. The idea is to get paid for taking intraday downside risk that others want to hedge.
Common Approaches
- Sell out-of-the-money puts on days with calm price action.
- Use predefined distance from current price instead of intuition.
- Stop trading after reaching a daily loss limit or profit target.
Tail Risk Considerations
The main danger in put selling is the rare but severe downside move. 0DTE contracts are especially exposed because there is no extra time for a partial recovery.
- Consider using spreads instead of naked short puts.
- Reduce size or skip trading around major event releases.
- Backtest scenarios with large intraday gaps and fast selloffs.
Short premium strategies can appear stable for long periods and then suffer sudden drawdowns. Risk controls must be defined in advance, not improvised during stress.