TL;DR
A Reddit post touted massive gains from 0DTE SPY options, masking the inherent risks. One trader lost his life savings replicating the trade, highlighting the dangers of survivorship bias and the lure of get-rich-quick schemes.
Story
The 0DTE Spy Game: Another Day, Another Dumb Bet
John, a retail trader, saw a Reddit post boasting a 235% return on a single 0DTE (zero-day-to-expiry) SPY option trade. He thought, ‘Easy money!’ It wasn’t. This is the story of how a seemingly simple trade hid enormous risk.
How the ‘Game’ Works:
0DTE options are like lottery tickets for finance. They amplify gains…and losses. Imagine buying a ticket for a race where the horse already started. One wrong move and you lose everything. With SPY (an ETF tracking the S&P 500), a small price movement can wipe out the value of the options in a matter of seconds. These high-risk, high-reward options are appealing to those seeking a quick buck and have little understanding of risk.
The Reddit post showcased a single successful trade, ignoring the many likely failures. It’s like showing the lottery winner while hiding the millions of losers. This is survivorship bias—a classic trick of scammers.
Human Impact:
John, blinded by the promised riches, poured his savings into a similar 0DTE SPY option, replicating the Reddit post. The market moved slightly against him, and his entire investment vanished—just like that. He joined the ranks of many other retail traders who have learned this harsh lesson the hard way.
Lessons Learned (The Hard Way):
- Survivorship Bias: Never judge a strategy based on a single success. What about the countless losses?
- 0DTE Risk: These options are exceptionally risky. The shorter the time frame, the more volatility can impact your investment. The chances of losing everything are exceptionally high, akin to gambling.
- Information Asymmetry: Reddit and other online platforms are rife with misleading information. Always verify information from multiple reputable sources before investing. Don’t blindly trust online posts or advice.
Conclusion:
The 0DTE SPY “success” story is a textbook example of how scammers use social media and survivorship bias to lure the naive into high-risk trades. This isn’t about skill—it’s about luck and manufactured hype. Remember Enron, the 2008 financial crisis? These events highlight how greed blinds people to obvious risks. The only guaranteed return in these kinds of trades is the enrichment of the few at the expense of the many. John’s experience—and countless others—serves as a sobering reminder of this harsh reality. Don’t let it be yours.
‣ 0DTE Options: Options contracts that expire at the end of the trading day.
‣ SPY: An exchange-traded fund (ETF) that tracks the S&P 500 index—a basket of 500 large-cap US stocks. Essentially, a simplified way to invest in the whole market.
‣ ETF: A type of investment fund that holds assets like stocks or bonds and trades on an exchange like a regular stock.
Advice
Avoid 0DTE options unless you want to gamble away your savings. Don’t trust get-rich-quick schemes—they almost always end badly.