Weekly Income Alert – July 11, 2025

Alright. Welcome everyone to Weekly Income Alert. Glad you’re with us. I see people here from Italy, from right up the road in Boynton Beach, Florida, Colorado, everywhere.

Great to see you. And monitoring the chat before we got on, I saw that there are a few of you that are new, so welcome. Glad you’re with us.

And if you are new, I saw there was some some talk about paper trading. If you’re not approved for options yet or if you’re just getting started, absolutely paper trade. It’s the best way to to get a sense of how this is gonna work. And don’t feel like you’re missing out on a moneymaking opportunity, because there’s always another trade every single Friday.

So it’s better to be comfortable, feel like you’re ready to do this, not be stressed out, and there’ll just be another trade the next week and the following week after that. So great stuff today.

As we mentioned last week, what we do here, we do a little bit of housekeeping. We get right into the trade, and then take some questions. And today, again, we’re going to try to wrap up at about 10:30 Eastern Time. First, I want to congratulate those of you who’ve been here since the beginning. That’s six wins in a row.

Assuming the market doesn’t fall ten percent today, which though it’s down a little bit, hopefully, we’re not gonna get a crash. So if that if we don’t get a ten percent crash today, then that will be six wins in a row. And rough calculation, that comes out to about eleven and a half points total. So about one thousand one hundred fifty dollars if you’re trading one contract each week.

Obviously, it’d be more. So congratulations. Let us know how you’re making out with this so far. We always love to hear that.

I do wanna put up a poll because one of the things I wanna find out from you guys is how you’re trading weekly income alerts. So are you using your broker’s website? Are you using a trading platform like Thinkorswim if you’re with Schwab or, you know, Fidelity’s trading platform? Are you using your mobile phone, the app on the mobile phone for your broker?

So James, if you wouldn’t mind putting up that poll, that’d be great. And just let us know how you’re trading because if if I find out that, you know, most of you are actually on a trading platform, then, you know, one of these sessions will show you what it looks like on thinkorswim rather than just using the broker’s website. I was playing a little bit around with thinkorswim this morning.

And if I’m going to demonstrate that to you, there’s some more moving parts. So I just want to make sure it’s going to be worth people’s time if we do that. So please let me know. Looks like early results are in most of you are on the website.

About a quarter of you are on the platform. So if these numbers stay consistent, then I think there’s no harm in showing you on Thinkorswim and one of these sessions. But from what looks like most of you are on the broker’s website, so most of these sessions will continue to do that. So yeah, let’s get to it. The market down a little bit today.

And but really, it’s the only thing that I’m concerned about at all in the markets. I have a note coming out today in technical pattern profits is the market’s very, very overbought. So at some point, it’s going to correct. It’s going to come in a little bit, maybe more than a little bit, who knows?

But right now, you know, there’s a a train that is just kind of steadily going down the tracks, I’m not about to stand in the way of it and and try to figure out when that correction happens. If if the market’s just leaving money there for us to pick up, I’m just gonna continue to pick it up until something changes. So, so right now, we’re staying bullish. We’re still gonna do the vertical put spreads like we have been doing for six trades in a row.

And, I wish we had some some sound effects. So when we cash in a trade, I can do like a cha ching noise.

When something goes wrong, you know, sad trumpets, you know, Maybe, maybe Miles will talk about how we can get a sound effects board, be like a morning zoo in the morning.

Well played. Very well played, Miles. Thank you for that. All right. Let’s get to the trade.

So I’m going to share my screen. So for those of you who are new, I’m on Charles Schwab and I’ve been demonstrating the trades on the Schwab website. If you’re not on Schwab, we use so we do use the Russell two thousand.

On Schwab, as you’ll see let me just share the screen and and make this easier.

Alright. Let me just make sure this is working. Great. Alright. So as you can see on Schwab so the Russell two thousand on Schwab is the dollar sign R U T.

If you’re using thinkorswim, you don’t have to put the dollar sign in. It’s just R U T. On other websites or other brokerages, it might be different. It might be R U T.

It might be R U T W if you’re trading the weekly options, which is what we are. So every broker has it slightly different, but you just have to do a search for the Russell two thousand.

And even if you put in RUT, you might be able to find the right situation. So here, we just enter dollar sign RUT, and then it comes up.

Now, what we are doing here, remember, we are trading spreads. We’re trading vertical put spreads. So we are gonna change this to a vertical put right here.

And again, different websites, different brokers and websites may call it something different. They may not have the word vertical in there. It might just be a put spread or a put credit spread, however it is. But as long as it’s a put spread, you’ll be okay.

So what we are going to do, so you can see the default here is at the money. That’s not what we want. We want it to be out of the money so that we have a very good chance of the option expiring worthless. So today we are going to sell, I’m going to go down to the twenty one seventies.

I saw some of you were speculating what it was going to be today.

It’s going the wrong direction. Here we go. So I’m going to sell the twenty one seventies.

We’re going to buy the 21.60s.

And the spread, you can see the spread is pretty small today because you know, volatility has been very, very low. This is, you know, out of the money.

So, yeah, it’s it’s real low right now just because volatility is so low. I was kinda hoping if the market was down today that we might get a little pop in volatility. We got some, but not enough to make a big enough difference. Oh, and I have the wrong expiration date.

Really important. That’s why this is so low. So we are trading okay. This is really important.

So in Schwab, the default is the monthly, okay? And that’s why you see July eighteenth, August fifteenth, June, September nineteenth. We are trading the weeklies because we’re going three weeks out. So then on this menu, we select RUTW.

And now we go down to August first, and that pops the credit, by two point one five dollars I was starting to lose my mind why the credit was so low. I’m glad I discovered that. We did not want to trade the July eighteenth. We want the August first is the expiration date.

And you can see the credit at the midpoint is about two twenty, two twenty five, two fifteen. It keeps kind of vacillating. When you are entering the trade, if you’re new, you do not want to do it at the market. You will get very bad prices and you’ll get nothing close to this two fifteen number.

If you sold at the bid, you get, let’s say, twenty, And if you bought it at ask, you’d get eighteen thirty. So you’re looking at one point seven zero instead of two point two zero dollars That’s a big difference. So you want to do it somewhere in the middle.

You can see down here it says net credit, and then there’s a limit price. And then we, I typically will adjust the limit a little bit lower just so that there’s a better chance of getting filled.

I I actually encourage you to try to get the better price. So if you see here, the midpoint is two fifteen and I’m putting in two ten, try to get two fifteen. And if you don’t get filled within a couple of minutes, you can always change it back down to two ten.

But I’m always going to have my limit price just slightly lower because also I’m kind of not watching this minute by minute. So I want to place the order and then kind of go do other things. And if I get filled, you know, later, that’s fine. Actually, I think it was the third week.

We didn’t get filled till about one o’clock in the afternoon.

And people were asking, should we change our limit price? No, stick to the limit price. We want to get a fair price for the spread.

And in fact, nobody really got filled for this first few hours, but at one o’clock, the option or the spread trade did fill at our limit price at the price we wanted. So that was fine. So I’m gonna right now, we’ve got two twenty. I’m gonna put it down to that’s not what I want. I’m gonna put it down to two fifteen and review the order.

And you can see here the estimated, costs. So before I hit place order on mine, I am going to send out the alert to everyone.

So I am just loading it up. I remember to have it preloaded today.

So I’m selling to open the Russell August first two thousand twenty five, twenty one sixty strike. Buy to open the Russell August first twenty one seventy.

I should have that as put.

Limit price two fifteen.

All right, I am submitting that. I posted the trade, so that should be hitting your alert and inboxes. Any minute, I’m going to place my order.

And let’s see. There it goes. All right. So that worked well. I’m going to stop sharing my screen.

And now we can get to some of your questions. Getting people filled at two fifteen. Phil said he got filled at two eleven, so he went below my limit price. That’s up to you.

But again, I recommend sticking with the limit prices. So Buckeye says, what’s the actual downside on this trade? So the way to figure that out. Typically, are trading spreads that have a ten point wide difference.

And each, remember, each contract represents one hundred units. So the maximum loss is always going to be with a ten point spread, dollars one thousand minus whatever you received for the credit. So in this case, if we get two fifteen, the maximum loss would be seven hundred eighty five dollars, a thousand dollars minus two fifteen dollars. If you’re able to get four hundred dollars one day, let’s say markets are really tanking and volatility is through the roof and we’re able to get a four hundred dollars credit, then the max loss would be six hundred because one thousand minus four hundred.

But right now, volatility is low, so we are getting in the in the low two hundreds, even the high one hundreds in some weeks. So it’ll be a thousand minus your net credit. If you if the the spread, width and the strike price changes, then that changes as well. But, typically, we are gonna be trading ten point spreads here.

Let’s see.

Somebody said I did my order backwards. I hope not.

No, I got a net credit. So I sold to open the twenty one point seven zero, buy to open the twenty one point six zero. So don’t know if you’re talking to me or talking to somebody else, but you always want to sell when we’re doing put spreads, always want to sell the higher put and buy the lower put. Buying that lower put is your insurance basically, that if the markets absolutely tank, markets crash, that put that you bought at the lower strike is your insurance policy.

Oh, it says my alert is backwards. I hope not. Let me see.

That would be bad. Let me see.

Sell to open. You’re right. My alert is backwards. Shoot. Let me thank you for letting me know.

Let me put that out again. Sorry about that. That is no bueno.

So if you just bear with me for a second while I type this up.

Thank you guys for catching that. And Miles was just complimenting me on my ability to walk and chew gum at the same time. Apparently, that is not something I am capable of.

Alright.

I guess I should have been careful what I what I wished for, the sound effects board here.

Alright.

Okay, let’s see. What other questions do we have? Getting people filled at two fifteen. Yeah, sorry about that. I don’t know how that happened.

Saucy Jim giving me the sad trombone. Yeah, deserved. Delta two twenty.

How do we determine the win percentage on each weekly trade?

That’s interesting. So basically, you are risking, as I mentioned, a thousand dollars minus the credit that you received. So the way I look at it is in this trade, if we get filled at two fifteen, we’re risking seven hundred eighty five dollars. If we keep the full credit, it expires worthless, we kept two fifteen, then two fifteen divided by seven eighty five would be your winning percentage or your return on that trade, you know, your return on the investment. So that’s how I would do it. If you made, if you were collecting three hundred dollars, and so the maximum loss would be seven hundred dollars, then three hundred divided by seven hundred. So that’s how you would do that.

On Schwab, can I tell what it expires if I’ve made money on it? So if it expires above your strike price, above the top strike price that you’ve sold, so in this case, twenty one seventy, then you’ve made money. You’ve you’ve keep the entire amount of the credit that you just received. If it’s between the strike prices, so if it’s between twenty one seventy and twenty one sixty, then depending on where it is would determine whether you’ve made money or lost money.

If it’s, you know, at two thousand one hundred sixty or below, then you have lost the maximum amount, which would be again, the thousand dollars minus the credit received. You can also go into your account at any time and look at the position and it should tell you what your P and L is for that position since it’s been open. So you can always take a look at that. And if you’re not clear where to find that information, definitely talk to Schwab.

I think you said you’re on Schwab. But definitely talk to your broker and find out where, you know, where you can determine the price. Now, one thing to keep in mind with the brokers, very often, they’re not gonna show you They’re gonna show you the last price, not necessarily kind of that midpoint, which is where you’re generally gonna get filled. So if the midpoint is, let’s say, zero five zero, but the last price was one dollar it’s going to show a very big difference.

In reality, you’re probably up more because it’s only worth fifty cents. But if the last trade went off at a dollar, that’s usually what they’re going by.

So keep that in mind. When you’re looking at your P and L, it’s always based on the last price, not kind of where it’s actually trading at that moment if a trade hasn’t gone off recently. So that’s really important.

Vince says Schwab will not let me run the trade you just recommended. It’s possible that you are not approved for options. I’m not sure. You’d have to talk to Schwab.

So any issues with your broker, you definitely have to talk to the broker about that. Frank says, is this subject to a wash sale? That’s a great question. So wash sale, if you exit a position for a loss and then enter the same position, I believe it’s within thirty days, you cannot take that loss off your taxes.

This should not be because we’re not trading the same strike price. If we were trading the exact same options, the exact same strike, the exact same expiration, then it theoretically could be. But we never are because each week we’re moving the expiration out. So that shouldn’t be subject to the wash sale.

That’s a good question.

Is the Russell cash settled? Yes. So what that means is the when you trade a stock, if have a stock option and the stock, I’m sorry, and the option is assigned or exercised, it means you actually, if you’re selling puts, you would get put the stock, you would receive that stock.

That doesn’t happen with index. So it is cash assigned, which means worst case scenario, market crashes, the position is very much in the money.

It’s a thousand dollars per contract minus what we’ve received. And that’s, it’s just a cash settlement. The cash comes out of your account automatically at expiration. It won’t happen before expiration, but the stock it can. With a stock at expiration, before expiration, it can be put to you or if you’re trading calls, can be called away.

But a stock option can be exercised before expiration. Doesn’t happen often, but it does happen.

An index option cannot. That’s why we trade the index rather than the ETF. It just it’s one more thing we don’t have to worry about. So it’s only a cash assignment.

Good question. According to your backtest, when the market went against you, did you usually lose on all three trades you had open? I’d have to look at the back test to see what the longest losing streak was.

I was gonna answer the question, but I am not sure. So let me take a look and get that to you next week. What our longest losing streak was in the backtest. Again, also, you know, we can change gears too.

So if the markets are going against us, we can start trading, you know, call spreads. We can get out before possibly, an option goes against us. Maybe it starts off profitable and then markets turn. So the backtest, in our back test, every loss was the maximum loss because we let every position go until expiration.

We do anything. We didn’t assume we were trading out of anything.

So every position was an assumption of the max loss. So we expect the real life results to be better than that.

So on the wash sale, does it only apply to the same price and expiration?

Would that constitute a wash or conversely rolling to a different strike at the same expiration?

Yeah, so only if you’re trading the same exact security. So the same expiration, the same strike price. If you’re rolling it out, you know, if you were selling covered calls, let’s say, and you had a strike price, you know, August fifty dollars strike, and then you took a loss on that and you rolled it out to the September fifty strike, that would not be a wash because that’s a different security. So same thing here. It has to be the exact same security for it to be a wash.

Trade the Russell put spread on E Trade Schwab does not show the eightone expiration. Weird.

If you’re on website, again, there was that dropdown menu where it said RUT and RUTW. The default was RUT and that only has the monthlies. But if you choose RUTW in that drop down, then it did show the other expirations. And again, any problems with your broker, talk to your broker, ask them how you can get that taken care of.

Let’s see.

What does this mean in terms of assignment? Please review your expiring options to ensure your account can support an exercise or assignment.

So in order to If you get assigned, so you have to have the cash or margin in your account. Your broker won’t let you make a trade if there’s no money in the account to support an assignment. So again, in this case, if we’re filled at two fifteen, then the max loss is seven eighty five dollars You already have the two fifteen in the account. So if this was assigned, again, it’s a cash assignment, dollars one thousand would come out of your account. So you do have to have the one thousand dollars in the account, but your broker is not gonna let you make that trade unless you have the one thousand dollars in the account or you have margin.

As far as, it says, please note that the option assignment can occur even if the option is out of the money or prior to expiration. Only with stocks though, not with index options, which again, why we’re trading the index. And it will never be assigned. You’ll never have a cash assignment if it’s not in the money.

That will never happen. So it’s with stocks would that what you said be accurate. That was, Applebee. So, again, with the Russell two thousand, you will not get assigned early.

It’s impossible. Can’t happen. And it will only be assigned if it’s in the money. And so if the markets start going against us and we’re getting close to our strike prices, and let’s say we decide we’re gonna stick it out and wait until expiration, yeah, you do need to be aware that there’s a potential cash assignment at expiration and the money will come out of your account if that is the case.

If we are getting close to something like that, I will certainly be on top of it. I’ll be talking you through it, let you know, hey, let’s wait it out or let’s call this one in early and get out early. But I’ll certainly let you know. I’m gonna be on top of that.

Alright.

Will you advise us to get out of the trade before expiration? Again, possibly. If it’s going against us, possibly. Again, many times I may let it go to expiration if I have a strong confidence that the trade is going to work out and we’re not going to get it signed. But every trade is going be a little bit different. One of the things that is important in this strategy is to try to collect as much money as possible, and let your winners expire worthless so that when we do have a loss, that those winners, those prior winners are making up for the loss. Because as of right now, and and and in most of the trades, the max loss is gonna be larger than the net credit.

That’s just typically the way this is. This is a service where you’re hitting lots and lots of singles, maybe some doubles, and collecting a bit of money each week. And then if things go really, really bad, you take a loss. But hopefully those losses make up for all the, I’m sorry, those wins make up for any of the losses.

So for example, if our next trade totally bombs out and we get assigned a cash assignment, then well, so far we’ve made, let’s say eleven fifty dollars on the previous six. If the next trade is a loss of eight hundred, then, you know, we’re still up three fifty for the seven weeks. Again, that’s per contract. So it is important to try to get every dollar out of your winning trades that you can.

Again, that being said, there will be times where we’ll we’ll take our chips off the table if the markets are turning. Every trade is gonna be different. But but it I do I’m going into every trade assuming that we’re letting it go to expiration and expiring worthless.

Yeah. John P, mentions you have security with the Russell being cash settled. Again, and that’s one of the reasons that that we’re trading the Russell rather than the ETF or or some stocks.

Yeah. Avoiding assignment. So Ken is saying avoiding assignment gives us peace of mind. I’ve done IWM2, which is the ETF on the Russell.

But the Russell pays better and more consistently.

Yeah, I’ve done the homework. So yeah, that’s really, really important. I don’t want anybody ever to get assigned early to have just, you know, some anomaly. Because that has happened to me trading stock options where, you know, I’ve sold a covered call and the call was in the money but it was months before expiration.

And suddenly my stock gets called away. It’s kind of odd or same thing with put spreads where I got put a stock, you know, way before expiration. Just for whatever reason, the person on the other side of that trade decided they wanted to exercise it and there’s nothing I could do about it at that point. So, this strategy with the Russell two thousand index avoids any of those headaches.

Let’s see.

All right, so I think we’re just about it. Let me see if I can find one more question.

Have we back tested any other index strategies? We did, but the Russell is what worked the best. So that’s why we’re creating the Russell. We’re constantly looking at things, seeing if there are other things that we can introduce into this service to make it work even better.

So, you know, we’re certainly not on autopilot here. We’re always looking at different ways that we can do that. But as of right now, our initial research was Russell worked way better than the Dow and the S and P. That’s why we’re using it also. You know, Russell’s a little bit more volatile, which means that we’re gonna get paid a little bit more. So another reason that we stuck with the Russell.

So alright. Well, I thank you everyone for tuning in. This was great. Hope next week we’re back here with our seventh winner in a row. That’s certainly the plan, and I look forward to seeing you next Friday, and have a great week, everyone.