You see a stock like NVIDIA making a massive $20 move, and you want in on the action. The problem? Buying 100 shares would require over $12,000 in capital, tying up a huge chunk of your account for a single trade.
What if you could control those same 100 shares and profit from that same move for a fraction of the cost?
That’s the powerful allure of day trading options. It’s a world of leverage, speed, and incredible opportunity. But let’s be blunt: for most new traders, it’s also a minefield of costly mistakes. Our team has seen countless aspiring traders jump in, treating options like lottery tickets, only to watch their accounts get decimated by concepts they didn’t understand.
This guide is here to change that. We’re going to cut through the noise and give you a simple, foundational playbook for day trading options. We’ll focus exclusively on the essentials: buying basic call and put options to trade intraday momentum in a disciplined, risk-first way.
The #1 Reason Traders Choose Options: Capital Efficiency
Before we get into the “how,” let’s cover the “why.” The primary advantage of options is leverage, which is just a fancy word for controlling a large asset with a small amount of money.
Consider this simple comparison for trading SPY at $545:
| Trading Vehicle | Capital Required (Approx.) | Control |
| 100 Shares of SPY | $54,500 | 100 Shares |
| 1 SPY Call Option | $281 | 100 Shares |
To make the same potential profit from a $1 move in the stock, the options trader only had to risk 0.5% of the capital the stock trader needed. This capital efficiency is the core reason why day trading options is so popular.
Choosing Your Tools: The Best Options Trading Brokers
You can’t trade without the right tools. While many brokers now offer zero-commission stock trading, options often have a small per-contract fee. When choosing a broker, our team prioritizes:
- Low, Flat-Rate Fees: Look for brokers that charge a flat fee per contract (e.g., $0.65) with no commission per leg.
- A Powerful Platform: Your software must have a robust and easy-to-read options chain, advanced charting, and fast, reliable execution.
- Reliable Data: Real-time data feeds are non-negotiable. Lagged quotes can be disastrous when day trading options.
The Absolute Basics: Calls, Puts, and the Options Chain
Think of an option as a contract that gives you the right, but not the obligation, to buy or sell 100 shares of a stock at a specific price, on or before a specific date. For a more detailed definition from an authoritative source, you can refer to Investopedia’s explanation of options contracts.
- Call Option: A bet that the stock price will go UP. Buying a call gives you the right to buy 100 shares at a set price.
- Put Option: A bet that the stock price will go DOWN. Buying a put gives you the right to sell 100 shares at a set price.
You’ll find these contracts on an options chain, which might look intimidating at first. Let’s break it down.
Here are the only columns you need to focus on as a beginner:
- Strike: The price at which you can buy (call) or sell (put) the stock.
- Expiration Date: The date the contract expires.
- Bid/Ask: The prices at which traders are willing to buy (bid) and sell (ask) the contract. The difference is the “spread.”
- Volume: How many contracts have traded today. High volume is good.
- Open Interest (OI): How many contracts are currently open and active. High OI is good.
The Two Greek Gods a Day Trader Must Obey
You’ll hear traders talk about “the Greeks”—calculations that measure an option’s risk. For day trading options, you only need to master two to survive.
1. Delta: Your Gas Pedal
Delta tells you how much your option’s price is expected to move for every $1 change in the underlying stock price. A Delta of 0.60 means that for every $1 the stock goes up, your call option’s price will go up by roughly $0.60.
2. Theta: The Melting Ice Cube
Theta measures how much value an option loses each day simply due to the passage of time. This is the day trader’s mortal enemy. If you buy an option and the stock’s price goes nowhere, you will lose money because of Theta decay.
The Hardest Part: A Pro’s Guide to Options Risk Management
Here’s something our traders learned the hard way—and trust us, we’ve all been there. You can have the best strategy in the world, but without iron-clad risk management, the leverage in options will destroy your account.
Your stop loss is ALWAYS based on the price of the underlying stock, not the option. If your trading plan is to exit when SPY breaks back below $545, you sell the option the moment that happens, regardless of what the option’s price is.
Position Sizing for Options
The 1% rule is king. Never risk more than 1% of your total account value on a single trade. Here’s how to apply it to options:
- Determine Your Stop: Based on the chart, you decide your entry is at $545.50 and your stop is at $545.00. This is a $0.50 risk on the stock.
- Find the Option’s Value at Your Stop: Your platform or a calculator can estimate that if the stock hits your stop, your $2.81 option will be worth about $2.50.
- Calculate Your Risk Per Contract: Your risk is the difference: $2.81 – $2.50 = $0.31, or $31 per contract.
- Calculate Your Position Size: If you have a $5,000 account, your max risk is $50 (1% of $5k).
- Max Risk ($50) / Risk Per Contract ($31) = 1.6 contracts.
- Since you can’t trade partial contracts, you would round down and take 1 contract for this trade.
This simple process of calculating your position size is the single most important thing you can do to protect your capital.
A Beginner’s Playbook for Day Trading Options
This is a simple, repeatable plan. Our goal is to trade strong, trending moves in highly liquid ETFs like SPY and QQQ.
Step 1: Find a High-Quality Technical Setup
Your edge comes from the stock’s chart. A great setup for beginners is the Opening Range Breakout (ORB). Wait for the first 15-30 minutes, mark the high and low, and plan to trade a strong breakout. For a deep dive, read our full guide on how to day trade the market open.
Step 2: Select the RIGHT Option Contract (Your 3-Point Checklist)
This is where discipline pays off.
- Expiration Date: Choose a contract that expires at least 5-10 days from now. This protects you from the most aggressive Theta decay. For beginners, avoiding same-day expiration (0 DTE) options is non-negotiable.
- Strike Price: Choose a strike that is slightly “In-the-Money” (ITM) or “At-the-Money” (ATM). These options have a higher Delta (0.50+) and are more responsive to the stock’s movement.
- Liquidity: Check the options chain. Ensure Open Interest is over 1,000 and the Bid-Ask Spread is tight (ideally under $0.05).
Step 3: Plan and Execute the Trade
Before you click “buy,” you must know your exit plan.
- Entry: Buy the option as the stock breaks through your key level.
- Stop Loss: Sell the option immediately if the stock’s price invalidates your setup.
- Profit Target: Aim for a clear Reward/Risk Ratio of at least 2:1.
Real Trade Simulation: A Look at Day Trading Options
Let’s walk through a real-world example from last week.
- Date: Monday, September 8, 2025
- The Setup: SPY had a clean Opening Range Breakout, establishing a clear high at $545.50. Our plan is to buy call options on a breakout.
Executing the Plan:
- The Signal: At 10:05 AM, SPY breaks firmly above $545.50 on high volume. This is our entry signal.
- Contract Selection (The Checklist):
- Expiration: We choose the weekly options expiring in 9 days.
- Strike: We select the $545 strike call, which is At-the-Money.
- Liquidity: Open Interest is over 20,000 and the spread is $0.01. Perfect.
- Trade Management:
- Entry: We buy the $545 call at $2.81 (costing $281).
- Stop Loss: Our stop is a stock price move back below $545.50. This equates to an option price of roughly $2.50, for a $31 risk per contract.
- Profit Target: We target a 2:1 reward, or a profit of $62, which means an exit price of $3.43.
- The Result: SPY trends higher to $547.00. Our option, with a Delta of ~0.55, increases in value to $3.65. We sell for a profit of $0.84, or $84 per contract.
A small 0.27% move in the stock resulted in a 29.9% gain on our capital at risk. That is the power of leverage.
The Bottom Line: From Beginner to Disciplined Trader
Day trading options is a powerful way to capitalize on intraday moves, but it demands respect. The key to longevity is to move beyond the “lotto ticket” mentality. Focus on trading high-quality patterns on liquid stocks, use the contract selection checklist to avoid Theta traps, and always define your risk before you trade.
Start with a paper trading account until you can apply this strategy consistently. When you go live, start with one contract. Your goal is to build the discipline that creates a lasting career.
Frequently Asked Questions About Day Trading Options
How much money do you need to day trade options?
While you can technically start with a few hundred dollars, our team strongly recommends a minimum of $1,000 to $2,000 in risk capital.
This amount allows you to trade single contracts of liquid ETFs like SPY without over-leveraging your account. It provides enough of a cushion to handle a few small losses while you are learning and helps you maintain proper position sizing, which is fundamental to long-term survival in trading.
Key Takeaway: Start with enough capital to trade single contracts while risking no more than 1-2% of your account on any given trade.
Can you day trade options with less than $25,000?
Yes, you can absolutely day trade options with an account under $25,000 by using a cash account, which is not subject to PDT rules.
The Pattern Day Trader (PDT) rule only applies to margin accounts. By using a cash account, you can place as many day trades as you want, provided you are using funds that have already settled. Since options settle overnight (T+1), your cash is typically available the next trading day. This is a massive advantage for traders building a smaller account. You can learn more in our deep dive on Margin vs. Cash Accounts.
Key Takeaway: Use a cash account to avoid PDT restrictions, but be mindful that you can only trade with your settled cash balance.
What are the best options to day trade?
The best options for beginners are on highly liquid, high-volume ETFs like SPY and QQQ, or well-known large-cap stocks like AAPL and TSLA.
The key is liquidity. These products have thousands of active contracts (high open interest) and very narrow bid-ask spreads. This ensures you can get in and out of your trades instantly at a fair price. Trading illiquid options with wide spreads is a hidden fee that will slowly destroy your account.
Key Takeaway: Always prioritize options with tight spreads and high open interest to minimize transaction costs and ensure you can exit when you need to.
Is day trading options profitable?
Yes, day trading options can be extremely profitable due to the power of leverage, but it requires a disciplined strategy and strict risk management.
The leverage that can create incredible returns can also lead to rapid losses if not respected. True profitability doesn’t come from hitting one “lotto ticket” trade; it comes from consistently applying a proven edge, managing risk on every single trade, and having the psychological fortitude to stick to your plan.
Key Takeaway: Profitability in options trading is a direct result of a repeatable edge and unwavering discipline, not from chasing speculative home runs.
Should I day trade 0 DTE options?
For beginners, our team’s answer is an emphatic NO. Zero Days to Expiration (0 DTE) options are tools for professionals and should be avoided.
The Theta (time decay) on 0 DTE options is incredibly aggressive. The value melts like an ice cube in the sun. You can be correct on the stock’s direction and still lose your entire investment in a matter of minutes if the move isn’t fast or powerful enough.
Key Takeaway: Stick to options with at least 5-10 days until expiration to give your trading thesis time to work without fighting extreme time decay.
What is a good Delta for day trading options?
A Delta between 0.50 and 0.70 is a great starting point for day trading options, as it provides a good balance of responsiveness and cost.
Options in this Delta range are typically at-the-money or slightly in-the-money. This means they will be very responsive to the underlying stock’s price changes (participating in at least 50% of the move) without forcing you to pay the high premium required for very deep in-the-money contracts.
Key Takeaway: Aim for a Delta of at least 0.50 to ensure your option’s price moves meaningfully when the stock moves in your favor.
