How I Turn Every Friday Into A $1,000 Payday Trading Credit Spread Options | Beginner Friendly
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- Опубликовано: 10 сен 2024
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I really appreciate your explanation of PUT and DEBIT credit spreads. Very helpful. It makes more sense to me this way.
Truly my pleasure! Thanks for the comment!
what is your average lot size per trade because trading 1 lot aint going to get you a $1000 a week...
Great informational video. I trade credit spreads a little more conservatively at a 10% Delta, wondering what your risk management is on these trades. Thanks.
It's hard to make it work at a 10 delta because you throw off your risk to reward which messes with your long term return. You aren't collecting enough credit. However, you can learn how I manage risk from my free Trading Handbook linked in my description :)
Thanks
You're welcome!
When you began the video, you talked about making $1000/week just doing two credit spreads that you hold for 3-4 weeks.
Later you recommended picking a 1-point wide credit spread that pays at least $15. You'd have to do about 67 of those credit spreads to receive $1000. The capital requirement would be 67 x ($100-$15) = $5695, not counting commissions and fees.
You're risking $85 (=$100-$15) per credit spread to make $15 in 3-4 weeks. The delta is supposedly around 20 when you open the credit spread, but a lot can happen overnight, let alone in 3-4 weeks, that could increase delta and vega.
You try to improve the expected value of the credit spread strategy by improving your directional forecast. But if you're so good at picking direction, why not do directional trades like debit spreads or outright call buys or put buys?
Credit spreads profit not only from direction but time decay which is why trading credit spreads directionally will have a high win rate compared to trading debit spreads or outright calls and puts.
@@AustinBouley Anyone who understands options knows about delta, gamma, theta and vega.
Nothing you just said addresses the risk exposure that you don't seem to want to talk about. Anyone who understands credit spreads knows how quickly they can go against you. It is that weakness that can make a debit spread, or an OTM call or put, profitable.
I actually make money trading debit spreads and buying OTM calls and puts. A long option doesn't have to go ITM to be sold at a profit, nor do you have to hold it until expiration.
I also make money day trading ES futures, which all about picking the right direction, entries, exits and trade management. You don't have to be right all the time, but you do need a suitable reward:risk ratio. The intraday swings in the ES make that possible.
Correct, based on your calculations you need 67 contracts to make $1,000, but it also means you need to have a 100% win rate. Remember when you lose and hit max loss, the loss is $5,695 on 67 contracts. If you are really unlucky and lose on the first 10 trades, you lose $56,950. You need to win on the next 57 trades in a row to break-even. To avoid this massive loss, you need to trade small and diversify.
I think the only thing is the TA, you should get that extra confirmation especially if the Theta and the IV are driving the price up, you can get a better higher credit fill and it is more of a quality trade. But combining the Delta with trading with the trend is a great way to avoid all the pesky greeks that try to get you
I completely agree! Trend and delta are key :)
Hello,
Is that the 200 EMA or SMA? When I go to tradingview those are the two options. Thank you.
SMA :)
To make collect $500 with 0.15 per contract you’d need to sell 34 contracts which puts the max loss at $2,890. Just saying if and when the outlier risk becomes a reality, be prepared to wipe out more than 5 weeks of winners
That is correct! However, with a 90%+ win rate, then I'll have 9 wins to 1 loss. Plus I have early management rules that can dramatically decrease the loss that I take when I loss
What’s the exit strategy ?
What is the exit strategy?
That one loss will lose all your weekly gains. This doesn't work. All you have to do is perform a backtesting on any software and you will understand
@@AustinBouleywhat is the closing strategy?
thanks 🤝
bro , at what time frame you make your conclusion if market is in uptrend or down trend mod ? 10 days , 30 days , or 3 Months
Daily chart so each candle represents 1 day
@@AustinBouley thank you bro
Do you always lets them expire? Or do you take a certain percentage winnings and or close out when your down a certain percentage? Stop loss/take profit strategy?
I take certain percentage wins and stop losses! Here's an update video: ruclips.net/video/Ky2nyDHxY5k/видео.htmlsi=jgW_K_6hF-y55FaB
Great job
Thank you!
Your strategy looks good but the fact is how long you have to wait until SPY REACH YOUR TRADE LEVEL...??? So in in real life trading thing becomes not too simple as that. Making money is never easy.
i still don't get it...such a huge amount of collateral for such a small amount of return 850 collateral for only 150 unless im wrong and if so please let me know
That's correct. However that's still a 17% return in a matter of 2 weeks which outperforms the market. Yes, there is risk like any trade, but don't forget that "small" consistent wins outperforms swinging for the fences.
Good video. To choose the short put you use 97% of the close price. Where comes that 97% from?
Just means you're going to be 3% away from the stock as your buffer
if only it was so easy...
There's no perfect strategy!
Good video. Question: you take the closing price x 97%. Where does the 97% comes from?
Just means you're going to be 3% away from the stock as your buffer
2 credit spreads a week? How do you collect $1000 from just two credit spreads assuming you are trading 0.20 delta? If you collect $15, would you have to buy 33 of them to collect $500? Can you make a video about sizing. Seems like commissions and fees would make scaling to $1000 a week prohibitive.
Commissions are definitely a limiting on this strategy which is why I moved to selling options on futures
I started trading by trading these. I remember when I started. I made like 7k my first month. Then lost it all the first trading day of the following month.
Also, most brokers will close our your trade around 3:30pm if you’re 1% or less away from your short strike. Which eats into your profit
Yes this trading style has the ability to make a lot and lose a lot so it’s not for the faint of heart and requires a lot of management
Why do you use the 200 Day Moving Average as an indictator?
Because it shows the long term trend quickly
@@AustinBouley very interesting! I see most using the 50 day so it was the first thing that I was not sure why you did it
Sooo - for the $1K per month - we need to sell 30 or so contract @ $.15 for each of our 2 trades every month, right?
Roughly, yes!
@@AustinBouley Thanks & nice tutorials! Do you typically hold your positions until expiration, or close at predetermined sell points or % profit?
what time frame were you using when you brought out the charts ?
The daily time frame where each candle represents one day
@@AustinBouley thank you, much appreciated
@@AustinBouley quick question. When you’re doing call credit spreads, do you do x 97% on the last open like how you do x 97% on the close ?
Yes, I use the same principle but reversed! I go 2-3% above the current close price.
how much cash do I need to begin.... lets say I only have $200???
You need more than that! It takes about $200 to place one trade but most brokers require $2,000 to approve you for margin and options
Like 20k
which trading platform do I use
There are a lot of trading platforms to choose from, you might want to consider using Tastytrade.
I think the word "passive" is played out...
Agreed
THERE IS SOMETHING SERIOUSLY WRONG WITH THE CALCULATIONS.
Can you walk me through the calcs to explain where I'm wrong? You said if you put on 100 TRADES you should win about 90 trades at $18 each which equals $1,620 and you will lose 10 of them at $82.00 each (total of $820). The net gain is $800 on 100 trades or $8 PER TRADE (1 contract). I agree with this. If you put on 2 contracts every week you will make $16 not $1,000 every week (on average). You would need to put on 100 contracts every week to make $800 every week.
To make $1,000 per week, you need to put on 125 trades (or contracts). In your video you show the buying power required for 10 trades is $830 (or $83 per contract, in a later screenshot it takes $850 of buying power for 10 contracts or $85). Let's assume $83 is right. So 125 contracts will take $10,375 of buying power to make $1,000.00 three weeks out. Since you are doing this every week, you need to put on 125 contracts each week for a total of 375 contracts ($125 X 3) for every rolling 3 week period. This requires $31,125 of buying power ($10,375 X 3= $31,125). Over the period you will make $1,000 every week, BUT it is not correct that you can do this with just 2 contracts. Is my math wrong?
I said in the video that I place 2 trades a week, not 2 contracts a week. Each trade uses 10-30 spreads.
Link to the discord?
Third link in the Description for free access to it :)
@@AustinBouley thanks bro
So you just take a full loss every time?
Assuming $800 profit at the end of 100 trades, that’s just over $400/yr. To make $1000 week you would need to replicate this outcome 130 times, or 13,000 spreads.
That’s a massive amount of work for 52k/year before taxes…
I like the strategy, but you’ve got to incorporate a stop loss somewhere, maybe 25%
You can or you can use a stop loss!
Stop loss?
Yes, you can use a variety of different options to manage losers like buying back on the last day, exiting when it breaks your strike price, etc.
Lol now show whole year pnl and maybe someone will become a member .
Ok, it's all in the membership :)
The only think about this video i dont like, is the fact that you don't explain how much buying power a trader would have to put up in order to make $500 per trade. On a 21 day SPY trade with an expected move of around 10 points, a person will have to put up $3400 to make $500. Now this is a great trade but for the tasty bite trader its too large. A trader should only be using around $1500 of buying power on a trade like this. So realistically a person will make only about $210 with a buying power of $1290 which is 16%.
SO again make sure you explain everything so that the tasty bite or small trader that works for a living can achieve a realistic goal. You often left out the buying power of these trades thus leaving your viewers in the dark. DO better in your training videos. I feel this is a click bait video.
Sorry, next time I'll explain buying power better! But it takes money to make money. People will small accounts shouldn't be expecting to make crazy money like this every week.
"FREE STEP BY STEP TRADING BLUEPRINT (NO EMAIL REQUIRED):" ---> Go to the link and the first item that is asked is... Your name and Email address :(
Sorry, it has been no email required for months and I just recently added the email optin. Sorry for the confusion and update all my videos so here's access for free: docs.google.com/document/d/1WbEYiCLerusenyPQ4ge-_2wSZlUGrLkwbrvLvKFHNb4/edit?usp=sharing