Weekly Income Alert – July 25, 2025

Welcome to Weekly Income Alert. I’m Marc Lichtenfeld. Let’s make some money like we’ve been doing for the last seven weeks in a row. Actually, today will be eight weeks in a row.

And that’s assuming the markets don’t fall hard in the next six hours or so. We need the Russell to stay, you know, within one hundred points of where it is right now. And so probably pretty good chance that will happen, and that will be eight weeks in a row of winners. So assuming that that happens, congratulations.

And you’ll see that I always put that caveat out there because I don’t want to tempt the trading gods. As I say every week, the trading gods are not merciful gods, and they don’t appreciate hubris. So I always acknowledge the fact that they can markets can turn on a dime. But assuming that the Brussels does not fall about one hundred points, then we should be good to make our eighth win in a row.

If you’re fairly new to Weekly Income Alert, or if this is your first winning trade that’s expiring today, you don’t have to do anything. That’s kind of the nice thing when this works well, we don’t have to actually close our position. We don’t have to go in to our accounts and make any trades. They just evaporate like the wind.

They expire worthless, and we just keep all the money, and that’s how it’s designed to go. That’s what we wanna have happen every single week. That’s what’s happened so far. It’s not always gonna be that way.

Let’s let’s remember that there will be weeks when the Russell does not cooperate. And when that happens, we will, you know, every every trade will be judged on its own merit, see how the markets are trading, how that trade is performing. Do we need to get out quickly? Do we give it a little bit of room to run?

So every trade will be monitored. And just, you know, I’m always putting that out there because, like I said, we’ve had eight weeks in a row. It’s been pretty easy so far. It’s not always going to be that way.

So I do want to put that out there so that you’re aware of kind of reality. It’s been great so far. The system is designed to do exactly what it’s doing, has a very high win rate in backtesting, but there will be times where the market goes against us. Right now, market’s been great.

And, you know, the important thing, I saw somebody ask in the chat if I would talk about, you know, what happens kind of as we hit the dog days of summer when markets typically kind of slow down. They don’t go straight up the way they have been.

The great thing about this strategy is we don’t need it to go up. We just need it to not go down significantly, you know, roughly about three percent. As long as it stays three percent above or I’m sorry, as long as it doesn’t go down three percent, we’re good to go and we keep all the money. Once it hits that three percent threshold, that’s where we have to start kind of monitoring things a little bit more closely.

But great job for everyone who has been trading and doing well so far. I always love to hear how you guys are doing, so feel free to put it in the chat, send me emails. It makes my day to hear about that. Also love to hear who’s here, where you’re from.

I saw we’ve got Kim in Oregon. We’ve got Wayne in Altus, Oklahoma. J. J. P.

Nells dialing in all the way from Saudi after being in South Africa. So thanks for doing that. Always love to see where you guys are from. Before we get to the trade, a really, really great email that I received, I’m going to keep it anonymous, but the member had a fantastic lesson that he wanted to share or she wanted to share with everyone.

And so I want to share it with you. And unfortunately, it hit them pretty hard, but they did want to share this. So you know that when I put out the trade, I put a limit price. So this particular member decided on I think it was a Thursday afternoon to put in a closing order for Friday. They decided they weren’t going to wait until the position expired. So they decided to put in their order and to buy back the put. The bid and the ask was zero five dollars zero point one zero dollars So theoretically, they should have gotten zero one zero dollars They put it in after hours as a market order, not a limit order, but a market order.

And some market makers saw that and played games. And because it was a market order, they had to pay whatever the market price was at that moment, and at that moment, some joker of a market maker raised the price to four point four zero dollars So instead of paying zero one zero dollars which is what the true market was, they got stuck paying four point four zero dollars blew up the whole trade.

And they went back to their broker and said, hey, this isn’t right. And basically, the broker said, our hands are tied. You put in a market order and that was the market at that moment.

So make sure you’re putting in limit trades. You don’t especially after hours. You know, if if it’s a tight market, if if it’s five, ten five cents, ten cents, markets are moving, there’s volume, you you should be okay.

But especially after hours, do not put in market orders because you can get your head handed to you as this member did. So thank you to the member that wrote in to share that lesson because it’s really, really important. Took a winning trade and turned it into a big loser. So when I put in limit prices, try to stick to those limit prices.

It’s really important. All right, let’s get to today’s trade. I’m going to share my screen, so bear with me. By the way, did get my eyes checked after last week where I couldn’t tell the difference between it was a two thousand two hundred, two thousand two hundred and twenty.

I did get my eyes checked, so hopefully we’ll be Okay this time.

So let me share my screen.

And I was scheduled to have an eye exam. I didn’t run to the doctor because of that. So just wanted to make that clear.

All right. Didn’t hear me sharing. All right. Great. So as usual, we’re going to this is Schwab, so we go to the dollar sign RUT, other brokers that you might not need the dollar sign.

Now, is something important. Usually we’re trading the weekly options. This next option expiration that we’re trading three weeks from now is August fifteenth. So we have the choice of trading the monthly options or the weekly options.

Often, even when it’s the third week of the month, which is the only time you can trade either, the monthly or the weekly, we’ve been trading the weekly. Today, I’m going to trade the monthly because the monthly has much more open interest. The weekly options in this particular strikes that we’re looking for and actually and just generally speaking, the August fifteenth weeklies didn’t have a ton of volume. I’m going with the monthlies.

Here’s what’s important to know. On the monthly options, this is true only for index options, not for stock options. But for index options, monthly options expire in the morning of the expiration date, not the afternoon like normal. So our options will expire Friday morning, August fifteenth, not the close on Friday.

It’ll be at the open, but you can’t trade it at the open. So the last trade you can make is Thursday afternoon, and then Friday morning’s open price is the price that counts against whether you’ve been assigned or not.

So there’s that tiny bit of risk there, though, to be fair, if we were trading the weeklies and the index gapped lower, you’d still get out in the morning, but it’s not like you could have made that change. You know, you’re still holding it Thursday afternoon if the market gaps lower Friday morning, know, you’re still holding it.

So for this particular case, I’m going with the monthlies because the open interest is so much higher than the weeklies. So when you’re selecting your option, it may say monthly or weekly. You’re going to choose monthly or it may say AM or PM. You’ll choose AM if that’s one of the things you have to choose.

In Schwab, it doesn’t say that. In Schwab, it’s just R U T. If you were trading the weeklies, then you would choose R U T W. But we’re not.

We’re just trading the monthly. So it’s August fifteenth.

So action, I want to go to vertical put spread. Again, different brokers might have it as something else. They might just call it a put spread, might be a vertical spread. Want to make sure it’s a net credit.

Now we’re going to go with the we’re going to sell to open the twenty one eighties.

We’re going to buy to open the twenty one point seven zero s. And that’s giving us a credit of two point two five dollars roughly two point three zero As I usually do, I make my limit just a little bit lower just to make sure I have a good chance of getting filled.

So again, it’s the Russell, the monthly or the AM, if that’s the choice.

Selling the twenty one point eight zero put, buying the twenty one point seven zero put, credit two point two zero.

Let’s review the order.

That looks good. And remember, if we don’t get filled right away, then you can just hang on to it and we could get filled later on. Several weeks ago, we got filled at about one in the afternoon.

Ned Max says on Robinhood, are eight fifteen am and pm. So yes, you would choose am. In the email that I’m sending out, I have in parentheses, it says monthlyam, just so it’s clear that that’s what that is. Let me send that out now with my two point two zero dollars limit. I see some of you are getting filled at two point two zero dollars Excellent.

I’m sending that trade.

Oh, wait. I’ve got to do one thing.

Alright.

Alright. I sent out the trade, so now I am going to place my order.

And my order was received, so we are good to go. All right. So I can stop sharing my screen.

And yes, I’m going be getting getting filled at two twenty five. That’s great. Freddie says, I don’t have a net credit.

You should have a credit if you’re selling the 2180s and buying the 2170s. That should be a net credit. If you don’t have a choice to select net credit on your screen, as long as you’re selling the two thousand one hundred eighty and buying the two thousand one hundred seventy, it will be a net credit. If it says net debit, then you have something, you know, something reversed. That means that you’re buying the higher strike put. So make sure you’re checking that. It’s an easy mistake to make.

Vertical put option.

Boaz says August spread thought I said October. I don’t think I said October. August fifteenth is what we’re doing. If I said October, apologize, but it’s definitely August.

Oh, great. Roswell says, Already paid for the lifetime subscription cost several times over. We love to hear that. So thank you for letting us know.

Leasex got filled at two fifteen.

Okay. That’s fine. Again, I put in the limit order of two twenty. And, you know, a few weeks ago, we didn’t get filled right away. We waited a few hours and the trade eventually came to us. So that’s what I prefer. You know, I want to make sure we’re getting paid a fair price.

And I do that on all of our services when I price an option and I put in a limit. I always want to make sure we get a fair price because sometimes the market makers will play games a little bit if they see a lot of volume come in.

As we mentioned with the person who put in that market order that time.

So I wanna make sure we’re getting a fair price. And right now, I thought two twenty is the fair price. If you got filled at two fifteen, not the end of the world, but I do recommend sticking to my limits.

Vince three thousand nine hundred thirty nine says, I’m not understanding what happens when they expire. Please talk through it. Great. Great question, Vince.

I’m glad you asked it. Essentially, nothing happened. So basically, these puts that we have sold, they’re out of the money. And so if the index never gets down to those strike prices, those puts are worthless, right?

Because puts are essentially insurance that the Russell will fall to that price. So in today’s case, two thousand one hundred eighty. If the Russell never falls to two thousand one hundred and eighty dollars then the insurance is worthless. It’s like having term life insurance that expires when you’re fifty and at fifty, you’re still alive.

So the insurance is gone. That’s exactly what happens here, except in this case, we’re the sellers essentially of the insurance. I mean, we sold the two thousand one hundred eighty and we bought the two thousand one hundred seventy. But the net credit means that we’re sellers of insurance.

So if the insured doesn’t die, if the Russell doesn’t go down to two thousand one hundred eighty, that insurance just goes away.

At expiration, it’s just gone. It has expired worthless. And so literally nothing happens and you just keep the money. So when you place this trade, that money hits your account right away. So if we got the two twenty credit, you’ll get two twenty dollars per contract.

So that two twenty dollars hit your account now today at expiration, assuming it expires worthless, just nothing happens.

When something happens is if there’s a loss at that point, then money comes out of your account. So if we sustain the maximum loss, that would be a thousand dollars minus two twenty dollars which would be seven eighty. So if we sustain the maximum loss on this trade at expiration, dollars seven eighty would come out of our account. Or if we, let’s say, closed it for a smaller loss, then let’s say we closed it for a three hundred dollars loss, then three hundred dollars would come out of our account.

Or let’s say we closed it early for a gain, but it’s not the maximum gain because you’ll only get the maximum net credit at expiration. So let’s say we close it early. So the market starts going against us and we say, you know what? Let’s take our ball and go home, take our profits and get out of this trade.

And the profit is going to be one hundred and fifty dollars instead of two twenty dollars In that case now, seventy comes out of our account because we already collected the two twenty. So in order to close the trade, even though it’ll be a profit, seventy would come out of the account and the trade would be closed at a one hundred and fifty dollars profit. So right now the money that’s in your account, that’s the maximum amount that you can have in the account from this particular trade. Anything else that changes from here on out means money would come out unless it expires worthless, which so far they all have.

And that is the goal. And, you know, that’s what we’re trying to do every single week. But that’s how essentially nothing happens when it expires worthless, which is what we’re going for.

Joe says, Explain what happens if the market drops between the spread. Great question. So we’ve sold the 21.80s and we bought the 21.70s.

So if the market is at twenty one point seven five, then what happens? Let’s say that’s at expiration and we haven’t done anything. At two thousand one hundred seventy five now because that’s right in the middle. So that’s a difference of five hundred.

So our two thousand one hundred eighty dollars puts are five dollars in the money. Our 2170s are worthless because the two thousand one hundred seventy five dollars is still higher than two thousand one hundred seventy dollars So we are down five hundred dollars on that two thousand one hundred eighty dollars put, but we’ve kept the two twenty credit. So in that case, we would lose two eighty dollars two eighty dollars would come out of the account. That’s at expiration.

Let’s say it’s a week from now, then the option prices will be a little bit different. And you know, the twenty one point seven zero s would still have some value. The twenty one point eight zero s will be worth more than five dollars because there’s still a little bit of a time element. So however, you know, whatever that spread is at that time, let’s say at that point the spread is five fifty, then if we close the trade, then I’m sorry, let me be clear.

When I say the spread, the spread the spread on the options, not the strike prices. So if that spread is worth five dollars and fifty cents at that point and we decided to get out, then we would lose three hundred thirty dollars because we’ve collected two twenty and then five fifty would come out of the account. So that’s how it works if it’s in between the spread, in between the two strike prices.

And again, we’ll be monitoring these situations to see how we’re going to play it anytime the market goes against us. And sometimes, you know, sometimes I’m not going to act. Sometimes I’m going to want to see if the market will rebound or if, you know, we still will be able to get it to expire worthless. Because let’s say the market’s trading at twenty one point nine zero with three days to go.

Maybe, you know, we’re going to give it a little bit of time and see if we can get out with that max net credit. So every situation is going to be different, but I’ll certainly be letting you know what my thinking is anytime the market goes against us.

All right, getting a few people filled at two twenty five.

Doug LD says, What’s an easy way to monitor the current spread value?

So in your portfolio, in your broker’s portfolio, it should show you what the gain and loss is on each position. You can also, like if you have Thinkorswim or some other platform that, you know, allows you to monitor stocks like have a watch list. I know on Thinkorswim, you can put in the actual spread itself. So you can either put in both options, so the twenty one point eight zero and the twenty one point seven zero and just kind of watch the bid and asks and last prices yourself.

Or you can put it as a spread where it’ll just be one line and instead of saying, you know, a sixteen dollars bid on one and a eighteen dollars offer on the other, it’ll just say two dollars You know, it’ll just be one line. So if you’re on Thinkorswim or some other trading platform and you’re not clear how to do that, you know, talk to their technical support on how to enter that as just a spread instead of the two separate entries. But you can do that too. I actually do both just to kinda see how the bids and the asks are trading and and get a sense.

So I have all of that on on my computer.

DLP1 says, does seasonality enter your thinking for these trades? You’re going three weeks out with only a three percent cushion approaching a seasonally weak time of the trading season. It does not because that did not show up in our backtest as something that we needed to do.

Basically, this system worked. You know, obviously in bear markets, things change, but we did not find that in certain periods of time, we need to adjust the strategy just because of the calendar. You know, I know there’s a big sell in May and go away saying out there, and it somewhat holds true. You know, there is data that shows that the November to May periods tend to be stronger for the markets.

But, you know, we’ve been pretty darn strong since May. We’re hitting new highs almost every day. So I’m not gonna adjust just because historically, some things have happened. I’m adjust if things need to be adjusted. If what I’m seeing in front of me is different than what we have been seeing rather than because the calendar turned to August. So that’s, I’m relying on the data and the back tested data that we’ve shown.

So I get this question a lot about Delta. So we’re not using Delta here. Basically, what we found is that roughly three percent away from the current price is the sweet spot for us. So that produced the best results in our backtest.

When we tried all kinds of different ways of making the system work and seeing what worked better. Three percent. So it wasn’t a matter of delta. It was a matter of being three percent away from the strike price.

So that’s generally what I’m trying to do. It’s not always going to be perfect three percent because I’m also taking volume into account, open interest into account. I want to make sure that we’re getting options that are liquid.

Also, I mean, if the markets look like they’re starting to get a little rough, then I might settle for a little bit less credit and put the strikes a little bit further away just to give us a little bit more cushion. So each situation is going to be a little bit different, but generally speaking, three percent is what I’m looking for.

So Dominic says on this trade, how much money do you need in your account to make the trade? So generally, you need one thousand dollars per contract that you’re trading. If you’re trading one contract, you need one thousand dollars because the maximum loss is one thousand dollars minus the net credit. If you were trading five contracts, you’d need five thousand dollars in the account.

And that’s for one trade. Remember, we are trading three trades. Actually, so Fridays, we actually have four trades open because the Friday trade does expire at the end of the day. So, to trade one contract, you really would need four thousand dollars in your account.

But you know, by the end of the day, Friday, one thousand gets freed up. So that’s what you need per contract. And again, multiply that by how many contracts you plan on trading.

Mark, crucial question, who autographed your glove?

This is Buster Douglas.

Yeah, Buster Douglas, and this was a gift for me. I actually don’t tend to collect these types of things, but it was a gift. And I’ve met Buster Douglas, super, super nice guy, and that was, in my opinion, the greatest upset in sports history.

So I kind of love that thing. Thanks for asking the question.

All right, let’s get to one more question since I guess we’re getting to some of the non essential questions if we’re talking about Buster Douglas here.

Steven in Maryland says, how do you pick the price to trade at? Again, looking for roughly three percent below the current strike and looking for enough volume and or open interest in the option. You know, if the option has five contracts, open interest and no volume that day, then I’m going to look for a different strike price because we want there to be activity in that particular strike price so that we can get in and out fairly easily.

Joe says, are you ready to rumble? You’re not allowed to say that. That’s trademarked. And that is true.

So Rowan says, where do you find AM or PM on Schwab website?

So on Schwab, it didn’t say that. It just said RUT, which is the monthly option. If we were trading the weekly, you’d have to choose RUTW in that drop down menu. So you don’t have to choose AM or PM. On Think or Swim, it does say monthly and it also says AM on there. But on the website, it won’t say AM. It’ll just say U dollars sign R U T or if if you’re choosing the weekly, RUTW.

All right, let’s get to one more. I entered a limit of two twenty, but it filled to two twenty five. Great. So what that means, a limit means the minimum price you’re willing to accept.

So if the market is better than that, then that’s great. That’s why I put in two twenty. At the moment that I did that, the market was trading about two point two zero. It was like vacillating between two point two five and two point three zero.

So I put in two point two zero just to make sure I got filled if the market, you know, moved against us a little bit.

So when you put in a limit order, very often you will get filled at a better price. You’re just saying this is the minimum that I will accept. So if the market went down to two fifteen, you would not get filled because you’re saying the minimum is two twenty.

I’m only accepting two point two zero dollars or more. If it’s more, then you just get filled that market price, which is great. But you want to put in a limit so that you get, you know, taken advantage of by market makers.

Joe said, I’m joking with you as a catchphrase. Yeah, I knew. I’m just making it clear to anyone who’s thinking about using Ready to Rumble in any form, it is trademarked and they will sue you. That is a fact.

Will you notify via text message if we need to do anything or by email website update? It will be by email and text message. So when I hit send on the email, it triggers the text message as well. So as long as you’re signed up for text messages, you will get that as well. So, yeah, that’s I highly recommend text messages in case you’re not in front of your computer, your your emails are not automatically pushed to you. That way, you’ll you’ll find out right away.

All right. Well, that will do it. We’re just about at ten thirty, but thank you all for joining us. It’s always great to see so many of you here.

Great job making it eight for eight, and hopefully we’ll be back here next week talking about nine for nine. So have a great weekend, and I will talk to you soon.