High-Risk SPX 0DTE Options Trading Case Study: The Falling Knife Project Analysis

A Reddit user’s report of a 55.2% return ($13.8k gain) over two months on a $25k SPX account using 0DTE options [0] highlights the leveraged potential of short-term options trading. The SPX index gained only 1.98% during the same period (Sept-Nov 2025) [6], underscoring the strategy’s high-risk, high-reward nature. 0DTE options now account for over 50% of SPX options volume, with retail traders making up half of this activity [1]. Sector performance data shows Tech (+2.03%) and Utilities (+2.16%) sectors drove SPX gains on Nov15 [7], which may align with the user’s directional bets.

1. Sustainability Gap
   : The user’s goal to reach $750k in 24 months requires an 180% annual compound growth rate—rarely achievable in leveraged trading [0].
2. Transaction Costs
   : 0DTE traders face 300–350 bps annual transaction costs due to slippage and spreads [3], which erode short-term returns.
3. Regulatory Scrutiny
   : FINRA’s focus on retail 0DTE trading may lead to new restrictions [2], impacting strategy viability.

• High Transaction Costs
  : Erode returns for frequent traders [3].
• Time Decay
  : Rapid value loss in 0DTE options limits holding periods [4].
• Market Volatility
  : Spikes in VIX can reverse gains quickly [0].
• Regulatory Changes
  : Potential restrictions on retail 0DTE trading [2].

• Short-Term Gains
  : Limited to favorable market conditions (low volatility) [6], but not generalizable for long-term goals.

• User Performance
  :55.2% return over two months (Sept-Nov2025) [0].
• SPX Benchmark
  :1.98% gain during the same period [6].
• Required Growth
  :180% annual rate to reach $750k in 24 months [0].
• Transaction Costs
  :300–350 bps annual for 0DTE traders [3].
• Data Gaps
  : Missing details on user’s exact strategy, risk management, and drawdown history [0].