0DTE Daily: Why Monday Was a Challenge

BY MARK SEBASTIAN 

February 25, 2025

Hey Traders,

 

Monday was a wicked one. The market opened up big out the gate before closing near the lows of the day.

 

While the close to close move was only .5%, the move intraday was north of 1% – a pretty solidified move.

 

I am going to break down what happened with yesterday’s trade and lay out what I see for Tuesday.

 

First, Let’s Recap Yesterday’s Trade

 

Monday was a challenge.

 

I was biased long.

After an initial sell of the big morning rally, I was impressed by the market rallying back to green.

 

Thus when I saw the pull back to VWAP, with option prices low I took the calculated risk that we were going to bounce off VWAP. With fly prices a little funky I went with straight XSP calls.

 

Unfortunately, VWAP did not provide support for SPX and we closed near lows.

 

However, while yesterday was a tough day, today provides an opportunity for a successful trade.

 

…Today’s Outlook

 

The VIX curve is pointing toward total confusion.

The VIX (the green line) is trading above March and April futures – but the curve itself is in a contango. That is the market telling us VIX could be at 20 or below 16 by Friday.

 

SPX is at a key level as well:

The index was above the 50 DMA most of the day, but closed below that. If the market doesn’t use that as a bounce pad today, we are going to want to get short.

 

I anticipate today being a day where markets move more than 1%. My guess is the market opens up, sells off, and THEN makes the big directional decision around noon.

 

Expect a trade after we see that decision made.

 

If you’re a member, be sure to join Licia at 10:15 ET – she’ll be looking at the charts and can provide her blueprint for market action today.

 

Call Ted if you aren’t currently a member – 888 872 3301.

 

Your Only Option,

 

Mark Sebastian

 

Mark Sebastian

Founder & CEO, Option Pit

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Mark Sebastian

Mark Sebastian

Mark Sebastian is a former member of both the Chicago Board Options Exchange (CBOE) and the American Stock Exchange (AMEX), where he spent years mastering the art of options trading in the most competitive environment imaginable. As Chief Investment Officer at the hedge fund Karman Line Capital, Mark manages sophisticated options strategies for institutional clients. He is the author of two highly regarded books on options trading: ‘The Option Traders Hedge Fund’ and ‘Trading Options for Edge.’ Mark is a frequent guest on major financial networks including CNBC, Fox Business News, Bloomberg, and First Business News, where he provides expert commentary on market volatility and options strategies.

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