Weekly Income Alert – June 13, 2025

How’s it going? Good morning.

Looks like we’ve got another week that we’re gonna be seeing a trade closeout for a win.

We had one last week. I was busy with the questions, so I kinda didn’t mention it, but we did have a win last week that we should be celebrating.

And, same thing with today.

There’s a good chance, we’re looking at the market and, you know, there were some concerns about what’s going on in the Middle East (as there usually is). So it looks like this morning, there’s not too much of an overreaction, so we’re probably gonna be closing out that trade, or letting it expire, for another win.

So, congratulations in advance, assuming nothing dramatically changes today.

And, for those of you who might be confused, I’m covering for Marc another week. I did last week, and I also will be next week.

He’s, abroad right now, but he’ll be back in about two weeks. And I’m covering for him as I’m, one of the developers of the strategy that, we’re using in this service.

So I’ll be here to answer any questions as I did last week, after we go over, the trade that we’ll be doing today.

One thing I do wanna say is that, last week, I mentioned that I was going to not only go over the trade in Schwab, which is what me and Marc usually use to trade, but I also wanted to cover it in Fidelity.

I’m actually gonna do that next week instead.

I have a Fidelity account.

I don’t use it very often, so I actually, just asked for it to be pushed up to the level two on the options, which most of you should know is necessary to make these trades.

So it’s kind of a my bet on that. The timing was just off that I thought it would be ready for today.

So for next week, I’ll definitely go over that because I know that a lot of you do use Fidelity.

But for today, we’ll just continue to use Schwab, and I’ll cover, today’s trade.

Before we do that, I just wanna share my screen and look at the price chart for the Russell.

Let’s, do this.

Okay. It looks like you can see that.

So, yeah, we’ve got a few trades, one of them that expires today, that are open, and these are the strike prices for the puts that are closest to the, underlying index price.

So as you can see, we’ve got a trade closing today that’s down here. Well, the strike price is down here, so chances are not very high that we’d be assigned that. Next week would be these, and, the week after that, these.

So I think overall, we’re we’ve got a pretty good setup going, on these trades.

For today, we’re going to be basing our trade roughly three percent.

I think last week, I went about five, but I I think for now, we’ll just stick with three percent, from where the price is trading right now. Usually, it’d be based off the previous close, but, we just wanna factor in a little bit of the down move this morning.

So right now, it’s trading at roughly twenty one ten.

So we’ll base, the strike prices we’re gonna go with on that.

So let me switch over to Schwab.

Okay.

So if you recall, for these trades, we’re going to be doing what’s called, at least in Schwab, a vertical put.

In your account, as long as it’s a put spread or a credit spread, it should be fine. But in Schwab, this is generally what we’re gonna choose, and you’re gonna have to type in dollar r u t as you can see here.

Sometimes we’re doing we’re choosing options that are weeklies.

So if you are typing in the w at this stage, it probably won’t pop up yet.

So for now, we’re just gonna put RUT, and we’re gonna switch over to vertical put.

And it’s actually here that you select RUTW when it’s, relevant.

So the trade that we’re going to make as usual will be expiring roughly three weeks out, so that would be July fourth.

So it’s a holiday, so that should be July third.

And then as I said, that’s roughly where it’s trading at now, but we wanna go about three, sometimes five percent depending on how the market’s acting, but three percent from there.

So that would be let me take out my calculator.

About the twenty forty six. It’d be a twenty forty five puts.

And so the one that we sell to open is the twenty four, twenty forty five, And the put that we buy to open will be ten dollars below that strike price.

K?

Now over here, we wanna make sure that it says credit.

Sometimes it might say net credit, kinda depends. I I have limit credit here, so I’m gonna go with that.

And, generally, we want to go right in the middle of the bid and the ask. So if you look here, you see the bid, the ask, and this midpoint here.

To help getting filled, you can always go a little bit below.

So you could do right now it’s two ten. Well, it goes back and forth a lot, but let’s just say it’s two zero five. You could always go a little bit below that to just two, something like that.

I’m gonna look at it for a minute just to see if if it fluctuates a lot.

Yeah. Let’s go with let’s just go with two zero five on that.

Usually, I I have an order set for the end of the day. If it doesn’t get filled, I, you know, just let it not get filled. If if you so choose, you can use a good till canceled, but I I just prefer to use a day order. And if I want to get in the next day or on another day, I’ll choose a different limit price based on what’s going on. So I’m gonna choose that, and everything looks correct.

Go ahead and review order, and then this is how much we would expect to generate as a net credit.

Obviously, there’s some fees here, and then you will go ahead and place order. So let me go ahead and put in the let me send an alert.

Actually, let me change. Let me go back.

Yeah. This I will say this trade actually does not have very much open interest.

So let’s actually move this and look for another strike price.

Let’s see.

That’s a lot better.

Okay.

Yeah. So luckily, I I just checked that real quick. That is something that we wanna focus on and make sure there’s actual volume.

So two thousand and forty five’s were, as you can see, there actually wasn’t any open interest. That’s the wrong one.

As you can see here, so we’re gonna go with the twenty forty.

It’s a lot better. And then ten dollars below for the put that we’re buying to open.

And then you go to review order as I just did before.

Okay.

So now I’m gonna go ahead and put this trade alert out.

Let me go ahead and type that up.

Okay. I see I actually see that some of you said you’ve been filled on that first one.

Now I will say I didn’t send the alert out yet, but I understand why you would have made the trade.

It looks like it wasn’t much open interest, so that’s why I went ahead and switched. But if you’ve been filled, then, you know, that, I guess, it worked out for you. I just wanna make sure that everyone can get filled. So, we’re gonna go ahead and move with the the the twenty forties and the twenty thirties.

So I’m gonna type up that alert.

Okay.

And I will submit.

Let me stop sharing my screen.

Yeah. Like I mentioned, I I see that some of you did get filled on what would have been the first trade, but, I look back, and I did see some of you also did mention it that it didn’t seem like a lot of open interest. So I wanted to make sure, and it didn’t really make sense to go with it if I didn’t think you would get filled.

So that’s why I switched it. But if you guys got filled, on the other trade, you know, that’s fine.

But to be safer, we’re gonna go with the twenty forty, twenty thirty as far as what we’re tracking in the portfolio.

I would have been perfectly comfortable with that first trade. So, you know, I don’t think it’s a problem unless you wanna cancel the order. I don’t think it’s a problem to be in that trade.

It was just a matter of, like I said, making sure that most of you can get filled.

K. Let me look at some of these questions.

Getting an error with account with an uncovered option positioning cash.

So for that question, did you try to do both sides of the trade individually?

So you had a naked put, and then you tried to buy a separate put, or did you do it as a one credit for, one trade? There is a difference in how that probably looks in your account.

So I can understand not being able to, put in a naked put trade, but if you did a spread and you have enough money to cover the spread, which would be the thousand dollars, There’s a ten dollars difference between the strikes, and the options represent a hundred underlying, either stocks or the index or whatever.

So you should need basically about a thousand dollars to even execute a single contract.

So they may may have been the reason why it didn’t work for you.

Maybe you, didn’t put it in as a spread.

Would let me use margin, but would cost me more.

It wouldn’t necessarily cost you more to use margin, but, you know, at that point, you’re using leverage, so it’s just more risk.

RUT on Schwab didn’t work.

Did you put in the dollar sign?

So it so it should be dollar sign r u t.

Here, let me actually go back just to be sure.

K. So on this part, you would have to put dollar sign r u t, and then you would go to, you know, vertical put.

If you just put r u t let me clear this. If you just put r u t, you’re gonna have a problem.

So you do have to put that dollar sign in.

Hopefully, that answers the h two forty eight. Hopefully, that that addresses your question. If there’s another question you asked, I I may have missed it.

Okay. I see. Let me go ahead and, go back and walk through some of the steps again for those of you who may have missed part of it.

So, again, in this part you would have to put dollar sign r u t, not r u t w, just r u t.

Okay.

Then here we’ll go to vertical put, and it’s here that you would select RUTW if it happens to be a weekly option.

Okay.

Then here, you would go down and select the expiration.

So if you went through those steps, you you should be able to find this trade.

K. If you didn’t put RUTW, then you’re not going to see the seven three expiration.

Okay.

I put in the spread for what you said, and when I went back to your screen, you were changing the stripe.

I went back to change it but got filled. Should I keep it?

I think I think it’s fine to keep that trade.

I I was perfectly comfortable with it except that I didn’t think it may have been enough volume for most of you to get filled, so I did end up changing it.

But the the trade itself, I think, is perfectly valid.

I I you know, it follows our criteria, the three percent, below where the index was trading right now, and, I think it would have been fine if it wasn’t just for the open interest making me a little, uncomfortable.

How far back did the backtesting go? Yeah. So we, we did over the past or at this point, a little more than the past year, and we also looked at periods where the market fell for several months. So we looked at, twenty twenty two, and we also looked at, the crash in the market earlier this year just to see what the results would look like. And in all of these cases, we had pretty good results, whether the market was up or down using this strategy.

If the market was down significantly and we felt that there was a reversal happening and we might be in a bit of a down market for a few weeks to months.

We would essentially use the same strategy, but in reverse, meaning we would use calls.

So instead of, put spreads, they’d be call spreads.

But the logic of the trade would basically be the same, and, using that difference, in down markets, we we also got good results. So to answer your question, a little bit more than a year the past year, we back tested, about six months of, the down market that was in twenty twenty two.

Maybe maybe four to six months, I think.

And then, earlier this year when we had several weeks of a down market, we we we looked at how this strategy will perform there.

Is this a net credit?

Yes. So the idea with the trade is that we would be collecting income by, selling a put for premium, buying a put, as a risk management strategy so that we’re limiting our max loss.

And so the result of the full trade is a net credit.

And then if the trade expires worthless, which we actually want, then we keep all of that net credit. If it if something happens where we wanna get out of it and cover quickly, we might keep part of the net credit.

So it might not be as much of a return as we could have if they expire worthless, but it would still be a positive return.

And in the worst case scenario, if the trade goes against us, our capital is sorry. Our risk is still minimized by the fact that we also bought a put that caps our loss to no more than a thousand dollars since we have a ten dollar strike price difference minus that net credit.

So the idea behind the trade is to collect income, but we also know that worst case scenario, our risk is limited.

I’m not seeing on Schwab where our vertical put spreads credited my account.

It was perfect purchased five thirteen and no longer shows up in holdings.

Five thirteen.

Did you mean five twenty three?

Yeah. I’m not sure I understand that question, but it would be expiring today if it’s a trade.

I think so.

It could be that it was already Credit oh, well, you’re saying it hasn’t been credited to your account.

You might see it over the weekend or at the end of the day.

But, if you’re not seeing what you think you should see, you may wanna just contact Schwab directly and ask them about that.

Is this a debit or credit? Yeah. It’s a credit. Every trade we’re doing is a credit spread.

And like I just explained, we you know, the ideas that we want to collect income in this strategy.

My spread wound up being your original numbers.

Okay.

That’s fine. That that’s that’s, you know, if if you wanna make both trades, if you wanna stick to one, you know, I think it’s gonna be perfectly fine either way. I just wanna make sure that most people actually got filled. Is it okay to do both trades? Yeah. Yeah.

Like I said, it’s up to you ultimately, but, I was comfortable with the twenty thirty five and twenty forty five strike prices, but it was not, showing the open interest I would have wanted to see.

Schwab. I input RUT only give me the monthly. So I’m not hopefully, you noticed.

I could go over it again, but you, yeah, let me actually, one more time, share my screen.

So originally, when you type r u t, it’s gonna be the dollar sign r u t, vertical put, and it will show up as this, RUT, and it will only show monthlies.

So you have to go in here and put RUTW, and then it’ll show weeklies as well.

Okay.

Can you please expand your screen?

Is I’m not sure what what what I would be expanding.

If you still have that question, maybe rephrase it so I can address it.

I have the nineteen ninety put. Can it just expire in the money, or do I need to close it?

You can just let it yeah. You can just let it expire.

I mean, if you wanted to close it, that’s fine.

But, generally, we wanna let our trades expire worthless assuming assuming that they’re profitable.

But if, you know, a trade moves against us, that’s when we may try to close it early or try to minimize our loss.

Not sure why Schwab has not entered the order at two point one that I entered.

It may just take a minute to get filled.

Also, depends on which trade you went with because, again, the first trade did seem to have low open interest.

So I’m just not sure.

I know some of you got filled, but I just don’t know how how many in general would have been filled. How many months, years did you conduct your back test before releasing as a program?

I I did just answer that question, but, like I said, it was, a little over the past year. We’ll get maybe fifteen months of backtesting in total for the past year and then an additional, roughly six months of backtesting and a down period in twenty twenty two.

And then we also just looked at, random periods over the last few years. We didn’t backtest the strategy per se, but we just looked at whether or not the results would have been somewhat comparable based off the logic of the strategy, and it seems like it would have been the same results. But the actual backtesting was over about fifteen months of an upmarket plus six months of, downmarket.

Are you looking at the index price at ten AM sharp or at the time of placing the trade?

I usually, we’ll go based off the previous close, but because, you know, there was some volatility this morning because of what’s happening in Iran, I wanted to go with the numbers right at the time that we were about to make the trade.

So it’s actually not all that different right now.

It’s still about twenty one ten.

So if we were going based off the close yesterday, it’d be closer to twenty one forty.

But, yeah, I just wanted to bake in some of that early morning volatility, which actually wasn’t as much as, I would have thought. So based off that number, that’s where we determine the strike prices.

And like I said, normally, we’re gonna go about three percent below based off our back tested, approach, about three percent below the index price.

So that’s where we got the twenty forty five, twenty thirty five numbers.

But then when I looked at the open interest, I decided to go a little lower just to make sure that we had a better chance of getting filled, or most of you getting filled.

What’s coming due today? Do we do anything or let it expire? We can let them expire.

If you wanna close them out, can. But if you let them expire, then it’ll it’ll be fine. It’ll it’ll still the trade will still, automatically be closed out for you.

What market reaction is expected from the Israeli attack on Iran? How will that affect our put spreads?

You know, I actually discussed this very briefly with Marc this morning. Personally, I think that a lot of volatility surrounding that region is baked in to the market.

I obviously, a conflict with Iran would be a next level issue for the region compared to what’s going on in Gaza.

However, I think a lot of people, are going to look at the odds of the situation and say, well, Iran might seem to have an incentive to, you know, retaliate strongly. There are a lot of other actors that will probably try to get them to deescalate.

I know that Russia is an ally of theirs, but they do have their hands full with Ukraine.

And I don’t think that they’re in a position to wanna, you know, expand their efforts their war efforts, with Israel or if Iran decides that they wanna go to war. So I I think that there’s still a good chance of de escalation despite what’s happening, but, of course, you never really know.

So there was an expectation of some volatility this morning and and potentially the market overreacting.

Maybe not overreaction, but reacting. And I think this morning, it’s pretty clear that the market doesn’t seem especially concerned.

So right now, it doesn’t really change how we’re going to conduct our strategy. If we had a huge drop this morning, a number of things could have happened.

One, we would obviously, be even more conservative in in in what strike prices we would have chosen and and and, you know, the the price that we have we have right now of around twenty one ten, Let’s say it was down to two thousand, which would be pretty stark.

We would have been basing our strike prices on that number instead.

And maybe we would have gone out to, like, five percent below, just to to really give us some cushion. But, you know, none of that happens, so we’re just gonna stick with what we, are gonna normally do when when things are, you know, moving in a direction that we want.

So for this trade, how is the risk calculated?

So for any of these trades, we’re generally choosing strike prices that are ten dollars apart, and ten dollars times a hundred, you get a thousand.

That’s because options basically let you control roughly a hundred shares of the underlying stock or ETF or the index, at least in in theory.

So your max loss, aside from fees, which are usually very small, is basically a thousand dollars on these kinds of trades. However, we’re collecting a net credit as well.

So you’re really risking about a thousand dollars minus the net credit.

So say you got filled today at two zero five, your max loss, if this trade completely goes against you, is only about, do the math in my head, it’s like seven ninety five.

So that that’s all you could lose on the trade.

How did you pick strike prices in your back testing? Yeah.

So the general rule So we did a statistical analysis, which I kinda covered, the logic behind that last week. And we found that strike prices that are roughly three percent below or the short strike, I should say, that’s roughly three percent below the index at that time that we’re making the trade will usually perform very well, meaning that we’re not gonna get assigned.

In most instances, The overall win rate was about eighty six, eighty seven percent, and, the net credits that we’re gonna generate are high enough that it’s worth the risk. You know, if you go even further below, you can, you know, you’ll have less risk of getting assigned, but you’re also not making as much in terms of premium or in credit.

So there is a balancing act there, and we found that the sweet spot seemed to be roughly three percent below the index price. And that and that we back tested more than just three percent. We went lower. We went higher. And it it just seemed like it was the sweet spot.

We also, you know, tested out ideal maturity dates and or or excuse me, expiration dates. And about three weeks out was also seemingly the sweet spot between, getting net credits that were big enough to be worthwhile, but also not being in the trades so long that the market could go against us.

Given the volatility in the market this morning, isn’t that strange that we couldn’t make more than two dollars? Sounds like a poor return potential given the increased risk.

Yeah. I mean, I will say, there there was some volatility obviously this morning, but I don’t think it was nearly as much as people anticipated.

So, you know, it’s just one of those things where, you know, options obviously that a lot of their pricing is based around volatility.

But I do think that it was a pretty muted response in light of the seriousness of the situation.

If we needed to sell prior to expiration, would the strategy be to sell before the highest strike price is reached?

Alright. Yeah. I understand.

Yeah. If basically, if the trade was moving against us and it was getting really close to dropping below the the the index, the Russell was dropping below the higher strike price or what’s called the short short strike, then to minimize our losses, we could sell before.

It depends on how much time we have. If it drops below, but we still have another two weeks and realistically, we think that it could come back up, we may not get out of the trade just yet.

But if, let’s say, it happens and we’ve got less than a week and the general sentiment in the market is that things are not gonna move back up at least over the next week, It might make sense to just sell it, you know, beforehand just to cap our losses.

But it really just depends on how much time we have and whether or not, you know, market’s down, you know, for the day or if it looks like it’s gonna trend that way for a while. So there is some subjectivity in terms of how we wanna exit the trade, but the general rule is that as long as things are going the way that we plan, we’re just gonna let them expire worthless.

We’re due a major pullback, does that affect our trade at all? Yes and no.

You know, with pullbacks, Marc is also very into technicals, and so there may be times where he may use technicals to determine whether or not he wants to be more conservative on a trade or maybe even, as I said, switch over to using calls instead of puts.

But overall, the strategy really is to stick with our discipline until we’re forced to reverse things. So if the market is going up in general, but we have a couple days that is going down or anything like that.

I we don’t wanna be premature and assume that the pullback has come. We really wanna wait until there’s confirmation of a major pullback.

And at that point, we may switch over to calls or depending on the reason for that pullback, if it seems like it might be temporary, it’s a response to something in the market or geopolitically, you know, maybe we’ll just widen, sorry, not widen the strike prices.

Instead of using three percent below, we maybe will do five percent below.

But in general, we wanna stick with our plan until there’s a confirmation in the market that something has fundamentally changed.

And as I said, maybe instead of puts, we’ll use calls. And the strategy does we practiced it as well. It does work in a down market when we use call spreads instead of put spreads.

Do I change it to debit? It should be credit.

These are credit spreads, so we don’t we don’t want to when you’re putting in the order, don’t select anything with the word debit.

It should it should say credit, whether it says net credit or limit credit.

Would you explain what the trade accomplishes?

The trade is meant to secure income for us.

The the term is gonna be credit because until the trade is closed out, that income is being credited to our account.

So while the trade is open, there’s a credit in our account, but that’s not money that we can withdraw yet. Right? So it’s potential income, and that’s why we’re waiting for it to expire worthless because when it expires worthless, that means we get to keep all of that credit.

So this is an income generation strategy.

I went a bit more cautious and went for twenty thirty five twenty twenty five.

Yeah. I mean, when we make these trades, obviously, we are going to actually be tracking the trades that you know, when Marc is here, he’s gonna be making these trades in his actual account.

And so the trades he’s gonna track are the ones he’s actually making. But it’s totally up to your discretion if you want to go a little bit further out, further in, if you want to use a different limit price.

It all depends on your own risk tolerance and even in terms of how many contracts you wanna trade. All of these are things that are up to your discretion.

Just keep in mind that what will be actively tracked in the portfolio is going to be the trade that’s actually issued.

So if you look at the trades tab, you know, what we have in there is the twenty forty and twenty thirty puts. That’s what’s gonna be tracked by Marc and I, but Marc when he’s on here because that would have been what he would have traded in the account.

What about closing a trade maybe a week or so early if the value has dropped to a small amount?

I had this happen last week. Our trade was only valued at five dollars. Yeah.

And, again, that’s something I you know, that’s up to your discretion. Unless Marc or I explicitly say that we’re going to close out early, The default plan is to let them expire worthless.

There’s there’s probably gonna be times where it just makes sense to get out early, whether it’s because things are moving in the wrong direction, or maybe we can really secure a lot of the net credit without having to wait much longer on the trade.

But in general, we want to let these expire worthless because a worthless options value that worthless means it worth zero, so that’s just the maximum net credit that we can get.

So that’s the general idea.

Can you take a snapshot of your screen and post this so I can make the trade after the weekly alert? So if you look at the trade, the trade tab here in the weekly income alert, your the the the live stream platform, there’s a trades tab, and there you will find the details of the trade that I issued.

I don’t know if you said that, screenshot of my screen. I’m assuming you mean of the brokerage account, but the details you’ll need for the trade are right there, that trade alert.

Which is better?

Which is a better way off a better return getting two options or decreased by?

I’m not I’m not totally sure I understand that question, Leonard seventy three.

Maybe if you can rephrase it, I can, answer it.

I executed the July twenty five, twenty forty five, twenty forty five.

Can I cancel?

Yeah. I, I would you know, that’s up to you, but, you know, that is further out than so, again, when we choose these expiration dates, the sweet spot for balancing our risk and reward is choosing an expiration date that’s about three weeks out. You gotta think about it.

The longer you’re in this trade, the longer the the higher the chance the market could potentially move against you. Doesn’t mean that we’re expecting it to, but when you’re in the trade longer, you have more time for it to happen.

So having an expiration at the end of July is quite a bit far out for what we’re typically trying to do in this strategy.

So if you’re comfortable with that trade, you can do it.

But to be closer to how we’re planning to trade these credit spreads, you may want to get into the July third, spreads instead.

Would it be possible to post an example of what this trade would look like on the Fidelity platform? Yes. I I was going to do that this week, but as I mentioned earlier, I ended up it’s an account that I I’ve had for a while, but I don’t really use it. So I ended up having to, ask for the level two options approval. And I thought that would have been set up by today, but it’s not by today. So next week, I will show it in fidelity because I know that some of you use that, and we’ll go over how to make these trades in there.

What’s the magic of doing this trade on Fridays?

Not necessarily magic, but, there’s a couple of reasons. One, it’s somewhat of a convenience to kinda just end the week with a trade and, you know, set it and forget it kind of. Fridays, you know, it’s the end of the weekend. You got the weekend, so you’re not expecting, you know, ton of volatility immediately after your trade.

You can kinda just do it and then not think about it. Another thing is that for weekly options, some of them get issued on, I believe it’s Thursday afternoons, but they begin trading that Friday.

So sometimes it’s a little easier to just get into those trades on that Friday.

So there’s a couple reasons, but it’s really a convenience thing ultimately.

If you log into it, would it couldn’t you show the Fidelity trade just not executed?

Yeah. No.

That’s that’s exactly what I plan on doing next week.

Yeah. Market makers tend to increase implied volatilities a bit on Friday.

If you log into it, would you oh, yours better your position first or sell first.

Oh, I I think I see what you’re asking.

So for these trades, you are trying to initiate a spread, which would mean that you’re buying a put and selling it at another put at the same time. You could do both things separately, but it’s better for you to to do it as a single trade. And in these platforms, in these brokerage accounts, that means setting it up as a put spread.

Otherwise, you’re selling one put, executing that trade, and then starting another trade and buying a put. And theoretically, you would think you’re getting the same results, but it’s actually not convenient to do that because your risk is not set up the same way as with a spread.

What I mean by that is when you make a spread trade, your risk is capped by the spread, the difference between the strike prices and the net credit.

But if you do a naked put and you sell a naked put, the risk doesn’t look the same.

Even though you’re buying an option separately, the risk on that naked put has basically different math behind it.

And so it’s just a lot easier to not do them separately.

If you can try to do them as a single trade as a credit spread in your account.

It probably wouldn’t allow him to set up a trick. Yeah. That that that’s what I’m saying. It it it’s a it’s an old account.

I do have Fidelity, but I don’t actively use it. So when I went in there, I wasn’t permitted to make those trades ironically, so I have to apply for that. Doesn’t typically take long at all to to have that approved, but it just happened to be a case that it wasn’t ready this morning. So by next week, I think it won’t be a problem.

I’ll show you how to go through there and, make the same trade.

So I’ll still cover it in Schwab, but I’ll also then go into Fidelity and and show how it’s done there.

Infidelity, you click on.

Okay. I see you’re answering someone’s question.

Yeah.

I don’t I’m not seeing too many more questions right now, at least not towards me.

So we may just oh, here’s one.

How much cash is needed in your account for this trade? So the idea is that for these spreads, because we’re choosing strike prices that are ten dollars apart, that would imply, a max risk capital risk of a thousand dollars.

Now you wanna factor in that there’s some fees associated with trading that usually pretty minimal, but more or less a thousand dollars, give or take, is how much you would need per contract to trade.

You could put more in your account, however, knowing that we’re gonna be holding roughly three option excuse me, three credit spreads at any given time since we’re choosing them that expire three weeks out.

So right now, for example, we we have three trades in our portfolio.

One of them is going to expire today, but we just entered a new one. So, generally, you’re gonna have three trades at a time.

So you’re gonna want more than a thousand dollars if you wanna be in all of those trades. But if you’re just talking about a single individual trade and you’re only talking about one contract, you basically need about a thousand dollars plus whatever you would think you need in trading fees.

What about selling call spreads farther out of the money than put spreads to make premium on both sides? You can a hundred percent do that.

That’s not something that we back tested, and it’s also something we probably won’t be doing in this this service, at least not until we have sufficient research to suggest that’s something that we can do regularly and it’ll work out. But that’s something you can definitely do to make even more income.

It should be expired worthless. It doesn’t plunge before the close. That means you keep the premium you receive. That’s correct. How much would you have made on one trade that is expiring today?

Are you referring to the, the trade we we made three weeks ago that’s expiring today?

For that trade, we got a net credit of two twenty, so that’s what we will be making per contract for that trade.

I have money in my account. Tried to do the twenty forty and Schwab, so I didn’t have the funds available. Not sure why.

We didn’t put a, an actual amount in your question, but you could probably that’s probably something you could ask Schwab directly to answer.

I’m not I I wouldn’t be able to answer that for you, but, customer service should should pretty easily be able to answer that for you.

Thanks for two straight wins since beginning this service. That is something to celebrate. Yeah.

I mean, you know, that’s more or less what we expect based on our back test and and and our research into the strategy. But, you know, to start off this this service and and have two, which should be, two back to back wins, assuming, you know, nuclear war doesn’t start by the end of the day, is is really good way to start.

It’s really good momentum, and it’s exciting to see this working out for all of you.

So I’m I’m glad I’m glad that a lot of you are enjoying this, and and we’re able to walk through these together and show you that, you know, credit spreads, even though they sound extremely complicated, they’re actually not especially once you get used to making the trades, they’re pretty straightforward, once you understand the logic of of making them.

So, you know, it’s still early in the service, and I think overall, as the weeks go by, we’ll all get more and more comfortable with executing these trades and just enjoying the ride.

So right now, I’m not seeing a ton of more questions.

Actually, I do see one more I’ll try to answer.

How do you calculate the return on investment for the trade expiring today? So the way we generally look at it is the net credit, is our reward for the trade, and our max loss is the capital we’re risking to earn that reward.

So basically, you look at the spread between these strike prices, ten dollars, which is what we’ll almost always choose, times a hundred because there are a hundred stocks or ETFs or whatever that are controlled by having one option.

So that’s a thousand dollars minus the net credit. So in today’s case, that’s two zero five. Well, that was the limit order, at least we put. So seven ninety five is the max loss on this trade.

So two zero five is the reward, potential reward. Seven ninety five is our max capital at risk.

So our return would be two zero five, I’ll do the math real quick, over seven ninety five.

So it would be about twenty five twenty six percent potential return if it expires worthless. Meaning that at the end of our three weeks in the trade, the value of the options drop to zero, which means that we’re gonna get to keep all of the net credit.

If they don’t drop to zero or if something happens and we wanna get in excuse me, get out earlier, and we have to cover the our trade.

Let’s say we, you know, pay a hundred dollars to get out of the trade.

We’re still keeping one zero five.

So our return is lower, but it’s still a gain.

So, again, by default, we’re looking for these options to expire worthless, but we still can make money even if we get out, earlier and and cover our trade.

But your win rate will be eighty seven percent positive through the year. Based on our back test, that’s what that’s what we expect. Yes.

We there’s gonna be some trades like there always is in trading that don’t go our way, but we know that going in. That’s factored into the strategy.

In general, most of these trades should go our way, and the potential rewards outweigh the losses.

Also, as I mentioned, there’s gonna be occasions where, you know, in the back test, we there wasn’t in the back when we back test this, you have to consider that we’re actually looking at the worst case scenario.

So the returns that we’re seeing and the losses that we’re seeing in the backtest are assuming that we let everything just expire and that even with the trades that we could have closed early, we didn’t do that in the backtest. We just let everything expire.

So for trades that we see going against us and we have a good reason to think it’s not gonna turn around, we probably will get closed out early, which means our loss will be even lower than what our backtest suggested.

So that’s another reason why we’re very confident in this strategy because we we assume a worst case scenario in terms of losses in the backtest. But, realistically, we know that we’re going to probably get out of trades that are going against us early or try to, you know, capitalize on what little, credit we can keep before it completely goes against us if, let’s say, we only have a few days left in the trade, and we might as well keep what we can. So things like that is why we’re very confident in the strategy and, why we think our back test is going to bear out in terms of the results we saw.

If you have the past three trades and tried today’s trade, you may need four thousand plus a little more to cover possible fee. That that’s a good point as well, actually. In general, we’re gonna be in three trades at any given time. But on a day like this, there’s one trade that is expiring, and we are entering another one. So momentarily, we are in four trades, hypothetically.

So that that’s a that’s a valid point.

Marc answered my question.

Okay. Anthony. In the back test, what was the average weekly credit?

Yeah.

I don’t have the results with me right this moment. That’s that’s actually something I maybe I can go through next week as well. But I believe it was generally between twenty to thirty something percent returns.

So that would imply somewhere between two hundred to three hundred and something dollars in net credit per contract, per week.

When will today’s expiring trade actually expire? Should be on July third.

That, yeah, that’s the expiration date we set. Also, now that you mentioned it, there is a trade that’s expiring next week, and it will not actually expire Friday. It’s expiring Wednesday because of Juneteenth.

So I do wanna point that out.

Next week’s trade will next time I see you, it will have already expired.

So I just wanted to point that out. So far, we profited.

What time of day will the trades expire? It depends on if it’s a monthly option or a weekly option.

Generally, the monthly options expire.

Well, they they all expire on Fridays, but there’s a difference between it expiring on that date and it being tradable on that date. So monthly options, generally, they expire Friday, but they will trade on that day.

And I believe with weekly options, the the the price that’s taken in the price that’s it’s factored into whether or not it’s in the money, out of the money is actually the open price. So, technically, it might be trading on that day.

It’s just the open price and, you know, that’s that.

But, with monthlies, they go off of the close.

But they both expire on Fridays.

Where is the volume shown for these trades? It does depend on your brokerage account.

In Schwab, it was a little bit hidden.

I can go in well, my account actually just logged out. Next week, I’ll I’ll cover that in both Fidelity and Schwab.

But the the volume is the open interest is shown on the screen that we are selecting our strike prices and our expiration dates, but there’s, like, a toggle that you have to click to actually show it.

But I’ll I’ll cover I’ll, show that next week as well. So, okay, I think, that’s probably enough for today.

But, overall, again, we’re celebrating what should be another win today.

So that’s two in a row, and, hopefully, you know, I’ve been able to answer your questions with clarity. And and if there’s anything that you still wanna answer, bring it up next week, or you can email us, and and they’ll probably have it sent to me, and I’ll try to answer it.

But overall, have a good day. Have a good weekend, and, happy Father’s Day, to those of us that are fathers.

So I’ll see you next week.