Weekly Income Alert – September 26, 2025

Welcome to Weekly Income Alert. I’m Marc Lichtenfeld, back and better than ever. My thanks to Anthony Summers for filling in last week, and thanks to all of you who wrote in and and made comments about what a great job Anthony did.

I agree completely. I’ve known Anthony for a long time.

Super smart guy, but an even better guy, and, you know, I think I’ve been working with them for about ten years. So, I don’t know if Anthony is moderating today. I know he’s up in New York, but yeah, Anthony. I think it’s been about ten years. So I’ve known him a long time. So you’re you’re always in good hands anytime Anthony fills in.

So, yeah, I was on vacation last week and just got some real good quality time with, my wife and importantly, my adult son. And any of you who have adult children know that that’s, that’s pretty precious, especially when they live far away from you as mine does. So just a week with my son road tripping was amazing. So thanks for all of you for being here. I see we’ve got Christopher s in Eagle River, Alaska, Ron in New Hampshire, eWalther in Tampa. Always great to see all of you and where you’re from.

So, let’s talk about and and, Marc, you says how dare you go on vacation. Doesn’t happen often.

But, actually, I will say, in a couple of weeks on October tenth, Anthony might be filling in for me again. I’m gonna be out of the country kind of doing a a special assignment type thing for the Oxford Club, and I’m not sure what my Wi Fi situation is gonna be there. So I’ll I’ll know a little bit more then, but I know Anthony is, geared up and ready to go if I won’t be able to to do that one. So he may be filling in again.

After that, it should be, it should be me for the rest of the year. I don’t plan on going anywhere. So, but good news, we, assuming that the Russell doesn’t tank in the next several hours, we should be sixteen for seventeen, I believe. So just, just doing absolutely fantastic, and I’ve been getting some really great emails from many of you.

I got a an awesome one today.

Someone was is starting to increase the number of positions, and and I’ve I’ve gotten that kind of email a lot, lately.

So as as you’re winning, you’re you’re starting to put more profit into it, which is great. Just, again, like I always say, make sure you’re managing your risk. Understand there will be losses right now. Assuming that we’re sixteen for seventeen, that’s about a ninety four percent win rate.

Historically, in the back test, we’re at eighty six percent. So if that number were to stay consistent and past performance is no guarantee of future results. But if eighty six percent were, let’s say, the magic number, then, you know, at some point, we’re gonna, have a a setback and and move back down to that number. So however you’re trading, just make sure you’re managing your risk so that when there is a loss, it it doesn’t, you know, take you out of the game.

Speaking of that, really starting off cheery today talking about losses. But speaking of that, I’m sending out an alert later today to technical pattern profits subscribers. So if you subscribe to that or your chairman circle, you’re gonna get my thoughts on the market. And I’ll I’ll tell you a little bit about what I’m seeing, And and this doesn’t include today, and the market’s pretty strong right now or or decently.

It’s it’s up a little bit. But what I’m seeing in the Nasdaq, especially, the Russell, you know, didn’t do well yesterday. It underperformed even the broader averages. But what I’m seeing in the Nasdaq and S and P, is a little bit concerning for a short term pullback.

It’s just very, very overbought. Momentum is starting to turn over, and just just saw some, some things in the in the chart that I just didn’t love and and could see a a pretty small pullback, but a a pullback nevertheless. Even a a two, three percent pullback will have an effect on some of our spreads. So, I’m not ready to make any changes.

And and I was thinking about a metaphor today. I I live here in South Florida, and, you know, anytime a storm is brewing in the Atlantic, we’re kind of unnoticed. And so if in in the newspaper on on the news, you’ll see they’ll mention, hey. There’s a disturbance off the coast of Africa or it’s, you know, starting to make its way across the Atlantic.

We don’t put up our hurricane shutters at that point. You know? We don’t we don’t make evacuation plans at that point. We wait till it’s much, much closer, and it’s apparent that the risk has increased significantly.

And that’s kind of how I’m treating this because we know from our back test that that being bullish, having the bullish put spreads, had an eighty six percent win rate including, you know, over the the periods that included, pullbacks and corrections.

So I need to see that the risk is greatly elevated and that there is, you know, some kind of change in the market. Like I always say, I am not gonna be the one who tells you to get out the top in any of my services, but especially in this one. You know, we’re we’re never gonna, we’re never gonna change tactics and suddenly get bearish just because the market is maybe just starting to roll over. I really do need to see that evidence that things have changed significantly, that the risk is is greatly elevated and that we’re now trending lower, not just a a little pullback, but the but the trend has changed.

So just do remember that, for how you’re managing your risk and, and because I do get questions all the time whenever there’s a pullback. Hey. You know? Should we be thinking about call spreads?

So, again, I will not be thinking about call spreads until I see, you know, a a significant shift in the market.

So let’s get on with today’s trade.

Let me make sure I’ve got my Schwab account up, and I’m gonna share my screen.

Alright. Let’s do this.

Alright. So you’ve got the screen here. So, if you are new, and I said this all the time for many of you. This is old, but if you are new, the ticker symbol is r u t for the Russell two thousand index.

In Schwab, it’s dollar sign r u t, and I’ll just click on that there, r u t. And we’re gonna change this to vertical put. You’ll see this under the two leg spreads, and, every, every broker might call it something different, might be a bull put spread, put spread, vertical put, but, Schwab, it’s called the vertical put. As long as it’s a put spread, it’s fine.

And under here, net debit, we wanna change that to net credit.

Alright.

We’re gonna sell to open and the expiration date on this one. So, for those of you who are new and, or haven’t experienced the AM PM discussion before. Okay? The expiration we’re we’re doing this three weeks out, so the expiration is October seventeenth.

October seventeenth is the third Friday of the month.

When we trade index options, it’s usually considered a weekly option. Okay? And those expire at the close. Okay? It’s called a a PM option. And and when we do that, when we’ve traded the October tenth expiration, when we eventually trade the October twenty fourth, none of that really matters as far as anything that you have to do when you place the trade.

The third Friday of the month is different. So the third Friday of the month is when monthly options expire.

And we have an we have a choice between monthly and weekly options on the third Friday of the month. The big difference is the monthly options expire in the morning on the expiration date at the open, and the weekly options expire at the close.

So the monthly options expiring at the open means the last chance you have to trade them are Thursday afternoon. If we trade the weeklies, you can trade them all day Friday.

So when that happens, you have the option to choose AM or PM in in some platforms.

If it’s the monthly option, you would choose AM. If it’s the weekly options, you would choose PM. And, again, this is only for the third Friday of the month. Every other Friday, it’s it’s just automatically the PM options.

So, because it’s October seventeenth, the monthly options we’re gonna do the we’re gonna we’re gonna trade the monthly options, the AM options on this one because the the open interest liquidity is just much, much higher on, the monthly option this month. We have traded both. We’ve traded the AMs and the PMs in the past, but looking at the October’s, the AMs, the the liquidity is much, much higher. So we’re gonna just do the October seventeenth twenty twenty five.

Again, if there is a choice, choose AM.

And we’re gonna do the we’re gonna sell the twenty three fifties and buy the twenty three forties.

Right now, it’s a credit of two twenty. Again, if you’re new, this is really important.

You’ll see a dollar eighty is the credit if you bought at the ask and sold on the bid, which is kinda how you would normally do, you know, a trade often.

But, like, I always recommend, you wanna try to get in between the bid and the ask. And what Schwab does and a lot of the brokers do and make it really simple for you is they put this midpoint here to show you what that credit is, and you can usually trade the spread somewhere in the middle. So what I typically will do, I’ll look at this midpoint. I’ll put my limit price just slightly lower than that midpoint just to give me a better chance of getting filled.

Let me, Kyle s is saying r u t or r u t w this time, Marc. It’s r u t. R u t w is for those weeklies, so we’re trading r u t this time.

And that’s in Schwab. Again, other brokers, might have it slightly different, but it again, it’s the AM option, the monthly option. So, yeah. So I I will typically lower my limit price just a little bit below that midpoint just to increase the odds of getting filled.

And and, again, like I say, every week, if you don’t get filled right away at the midpoint or at your limit price, you know, you it’s okay to wait a few, minutes or even hours. Sometimes it it can take a few hours if the if the market suddenly starts to move, but that’s fine. You know, we’re we’re we’re we’ve waited before. We once got filled at one o’clock in the afternoon eastern time.

So it’s totally fine if you don’t get filled right away. So, I’m gonna bring my limit down. It’s trading about two twenty five, two twenty. I’m gonna leave it at two twenty because it keeps jumping up and, back and forth between two twenty five and two twenty.

So, I’m gonna review my order here.

Selling to open the October seventeenth twenty three fifties. Buy to open the October seventeenth twenty three forties. Midpoint, two twenty. Alright. So go ahead. Place that order. I’m gonna send it out to everyone before I place my order.

Alright. I’ve got that. So I’m sending this to everybody in case anyone is not on the broadcast today.

Sorry. There was one one thing I needed to change here.

A mistake that I made in the template.

Let me get that fixed real quick.

But see, anybody I’ve seen people getting filled at two twenty? One person got filled at two forty five, Jerome b. Wow. Nice.

That’s a a pleasant surprise when that happens.

Alright. I’m gonna go ahead and send this, and now I’m gonna place my order.

Alright. And so that is placed.

Great. And let me stop sharing my screen.

Alright. And we are good to go. Looks like a lot of people are getting filled at two twenty.

Good stuff. Just reviewing some of the other positions in the portfolio right now. So we have, you know, the one that’s open today that will expire, this afternoon. Again, assuming that the market doesn’t fall, that is the twenty three thirties, twenty three twenty. So, you know, the Russell would have to fall about a hundred points.

You know, hopefully, that doesn’t happen, today, and that should expire worthless. Our official credit is two thirty on that one. Next week’s options next week’s spread, the twenty three forties, twenty three thirties, right now are trading at about ninety cents, I believe.

And, the one that, Anthony put on for us last week, the October tenth twenty three ninety twenty three eighties, are currently the price is, a little bit above where we sold it. So on paper, it’s a it’s a loss, but the the index is not in the money. So we’re we’re not worried about that yet. And and it makes sense because last Friday morning, the Russell was about fifty points higher than it is right now.

So it makes sense that that spread, the price of the spread has increased at this point. But, assuming that the options don’t end up in the money, we’re gonna see the price of those options start to decay a little bit more rapidly as, you know, the week goes on next week and then certainly into the following week. So as long as the Russell stays above twenty three ninety, we’ll be in good shape. And even if it does start to go down, you know, depending on how far down it goes, if it’s if it’s, you know, not, in the money, if if it’s just at the money or even just slightly above the money as that time decays, we could even, be getting out of a position with a gain even if the price is is starting to get closer to our strike price.

So we’ll we’ll see what happens. We’ll we’ll certainly manage it. But right now, there’s nothing to worry about, and and, hopefully, we just see these options decay. And and and remember, when you’re selling, options decay is your best friend.

You want everything to go to zero. That that’s a hard thing to a hard concept for people to get their heads around when they’re new to selling options, selling spreads. You you want it to go to zero. Now you don’t want the index to go to zero, but you want your options to go to zero, and that way you keep all the money.

Buff asked me to show my order template again. Let me reset that up for you.

Just give me one second here.

Alright. So I will reshow this again.

Share my screen.

Okay. So, again, this is the the opening screen We’re gonna put in on Schwab. It’s the dollar sign before the RUT, so put in dollar sign.

We’re gonna change this to vertical put, and this month, it’s RUT. If if we were trading a different expiration, you could put it to RUTW, and that will give you other expiration dates. But, we’re just trading the October seventeenth, monthly options. So RUTW, the twenty three fifties, not too far, buying the twenty three forties.

And here is the setup. So you can see the midpoint is still at two twenty.

Net credit, I put my limit price at two twenty. You can change that to whatever you want, but my official recommendation is at two twenty, and then click on review order.

And that is what it looks like.

So let me stop sharing.

Alright. And let’s get to some of your questions.

Andy g, there’s another tariff deadline coming on October first. I’m guessing they won’t bother the Russell stocks, but what are your thoughts? Yada yada stuff, hundred percent drug tariffs, fifty percent cabinets, twenty five percent on heavy trucks. Yeah. I saw that fifty percent on on cabinets, today. That’s that’s not great, especially for, you know, all those small businesses that do, you know, kitchen redesigns and renovations.

That’s not great.

So far so far, tariffs have not made a big difference, certainly not in the market. You know, I I I chat with a friend of mine who’s, a hedge fund trader all day long during the markets, and and we all I always say then, like, when does the market start to take in some of this stuff into consideration?

Because it seems like it should be affecting it. You know? We we know that so far, the tariffs have not been widely passed on to the consumer yet. Some of the some of the wholesalers, some of the importers are eating them. Some of the retailers are eating them, and Walmart has said it’s it’s you know, their margins are are being pinched a bit. So at at some point, it should matter to to earnings or to the consumer.

But so far, it hasn’t, and the economy is still pretty strong. There was a a pretty good unemployment number, you know, today that came in. So, I don’t know when these things start to matter. I’m concerned that when they do, when the market suddenly says, okay. Now it matters. It could be kind of a violent move down. I know there’s an expression that the market takes the stairs up and the elevator down.

So whatever that turning point is, that is a concern of mine. But until then, you know, we’re gonna we’re gonna ride this train as long as it’ll take us and and keep cashing those checks for as much as we can. And, you know, that is one of the reasons that I’m not exiting positions early. I’m trying to let them expire and capture every dollar that we can because when things do go against us, you know, we’re gonna want every dollar that we’ve made as that buffer against some of those losses. So, when this happens, I don’t know.

Will it happen? You know, I I would have guessed it would have happened already. So, hopefully, the economy can continue to to shake these things off and, and and keep moving forward. You know, but but tariffs certainly, and I’ve said this from the very, very beginning, are not good for the economy.

They’re they’ve never worked. They’ve never, you know, achieved a goal. They’re isolationist. And so to me, it it kinda goes against everything that we want in our economy.

So but so far, you know, so far I’ve been wrong. It it hasn’t been a problem.

Adv Trav says, what do you think will be the net effect will be if the government goes into a partial shutdown?

Again, I I I at this point, I the market has shaken so many things off. I would expect it to do it again also because we have seen market government shutdowns. It’s not unprecedented. And, you know, it’s not good.

It’s not good for the economy. It’s not good for anything, but they eventually come to terms and get reopen and things go back to normal. So I I don’t think it’ll be a dramatic effect unless somehow this is different. I mean, the president has threatened massive government layoffs.

Should that occur, you know, what effect that has? It’s just a little hard to to know at this point, and and, you know, would those people be brought back once the government reopens? It’s it’s it’s just hard to know. You know, we there’s no doubt there is a lot of fat in the government and, you know, DOGE tried to get rid of some of it.

Massive layoffs would get rid of some of it, but we also need people to run the government and run all the different operations, that encompass the government. So what he means by mass layoffs and and what effect that would have is is a little hard to know, but just the just the fact of shutting the government down, ignoring the the mass layoffs for a second, I don’t think would have a a tremendous effect because I think everyone in the market would expect this will get resolved eventually.

So Cliff j asked a good question. I’m wondering what the win to loss ratio could be to break even. Is it two or three wins equals one loss from a monetary perspective? So right now, figure it’s gonna be about three to one, slightly higher because we’ve been collecting about two twenty, two thirty, a credit every month I’m sorry, every week.

And if we took a maximum loss on any week where we’re making two twenty two thirty, then the loss would be about seven seventy seven eighty. So you’re gonna need a little bit more than three to one there. However, when markets get more volatile, then then we’ll make more, and so you’ll the max loss will be less, and so that ratio will come down. And so yeah.

So so, you know, it sounds a little scary that you might need three to three winners for every loss except, again, going back, we we have a a an eighty six percent back tested win rate. So if if that holds, you know, anywhere in that ballpark, that should be fine. And, also, that three to one ratio I’m talking about, and that’s for the sustaining a maximum loss. We don’t always have to sustain a maximum loss.

Sometimes it’ll happen. Sometimes the market will have a big whoosh down. The options will end up spread will end up in the money, and there’ll be nothing we can do about it, and we’ll be facing a maximum loss situation. But there are gonna be plenty of times where that doesn’t happen.

And the one loss we’ve taken so far, we lost, I think, it was about I think it was a a little over five hundred dollars. So it it was not a a devastating loss at all. So that’s that’s gonna be the goal when things are going against us to minimize the loss as much as possible. But, but for the max loss situation, yes.

It’ll right now with the credits we’ve been receiving, it’ll be about three to one. But as markets get more volatile, and markets come down, then we’ll start earning more on our credits because, you know, remember, you the market will compensate you for risk. Right now, market’s hitting all time highs pretty much every week, so the market does not anticipate a lot of risk. So it’s not paying people, for that lowered risk, that perceived lowered risk.

The market falls, then suddenly, you know, volatility is higher because the perceived risk is higher. So someone who is trading options, the price will be higher because the risk is considered higher, which is great if you’re selling options because you’re getting paid more to take on that risk.

Skagg says, how much can you win playing one option?

So the the kind of the the way you phrase that how much can you win, how I would answer that is we sold the credit today for two dollars and twenty cents. So one option, you would earn two hundred twenty dollars, if that expires worthless. So the two hundred twenty dollars hits your account immediately, as soon as you sell that option. And then at expiration, if it expires worthless, then the thousand dollars that is basically kept aside by your broker, to to make sure that you can cover a loss if it ends up as a loss.

Once that expires worthless, that thousand dollars is released. But the two hundred twenty dollars automatically hits your account, as soon as you sell that option.

Mike h says, how do we make more in volatile markets? Great question. So right now, because the markets are not volatile, because we’re hitting new all time highs every day, the amount that we’re getting paid is pretty low. Like I said, we’re making about two thirty, two twenty each week.

In a volatile market, we’re gonna be the price of these spreads with the the same, you know, same formula trading roughly three weeks out or trading three weeks out with ten point strikes, the price of those spreads are gonna go higher. It’s gonna go over three. It could go over four. It could even go over five, when when things are really hairy.

So when that happens, that means we’re gonna be making three hundred or four hundred or even five hundred dollars per spread. So that’s how we will make more money. So if the market, you know, absolutely tanks, really falls off a cliff, not gonna be good for our existing positions, but the new positions, you know, we could be we could be generating some some pretty good money there. And that’s that also was in the back test because we did have times where that happened.

And there were times, in the back test where I believe there’s one time where the option that week was over six, six dollars or six hundred dollars. So, there is the opportunity when things get get really scary out there to start bringing in more money by selling these spreads. But, again, that means you’re taking on risk because the market market doesn’t give away money. I always tell our subscribers that market does doesn’t give away money.

If you’re trading if you’re buying a dividend stock and it’s got a twelve percent yield, there’s a reason because you’re taking on more risk than a stock with a four percent yield. Same thing here. If you are able to sell the spread for five dollars instead of two twenty, it’s because the the risk is higher. Now just because risk is higher doesn’t mean that you automatically will take a loss.

It just means the risk is higher. Just like a hurricane that is, that is coming close to Florida, the risk is higher that it’s gonna hit your house, but it doesn’t automatically mean that it’s coming right at your house. It can, as they call it, wobble a little bit and go fifty miles away, and then you end up being fine. So same thing here.

So higher risk means higher potential reward. So always remember that.

Shayan says, how do you select the strikes? Is it a certain delta? No. So, we’re not using delta.

We’re what we found in the back test is that roughly three percent from the current price is the the optimal place to trade. Now I will make some slight adjustments depending on liquidity. So if, you know, for example, if we traded the twenty three fifty, twenty three forty strike, if if twenty three fifty five was really the the three percent number, but there wasn’t much open interest or volume, the but twenty three fifty had more, then I’ll go down to twenty three fifty just to give you the a better opportunity of getting your trade filled when there’s more open interest, more liquidity.

And then I’ll also typically air on the side of caution. So if that, let’s say, twenty three fifty five was the that that true three percent number, I’ll usually go a little bit lower to twenty three fifty rather than higher to twenty three sixty just to give us a little bit more cushion, in case the market falls down.

Ken Hurst says, I can see the premiums going higher, but for the sake of safety when volatility is so high, should we not use point nine five percent or point nine six percent below current price when we open new trades rather than the point nine seven percent. You can certainly do that. Again, the back test is is what guides us and and what you know, the back test numbers were sensational, and so that’s what we’re using.

But every market situation is gonna be a little bit different. So there could be a a situation where, like I was saying earlier, if open interest is better, just slightly lower, I’m gonna go a little bit lower. If it makes you more comfortable to go slightly lower to to give you a five percent buffer rather than three percent, then you can certainly do that. But, for the most part, I’m sticking with what has worked, and, you know, that that’s kind of you know, one of the the important things that you learn as a as a technical analyst and when you design systems is if you have a system that works, you stick with it.

And it’s only when it doesn’t work anymore that you start to make some changes, but you don’t anticipate it not working. Because if if it has worked historically, then then you stick with those systems because a system that works is is worth its weight in gold. And so far, it’s been working really well, and and it did work in that backtest even when, markets got a little bit difficult. So we’re gonna stick with that.

But, you know, when you’re trading your own money, you have to be able to sleep at night. That that’s the most important thing. So if you need to give yourself a little bit, more of a buffer to be able to sleep at night, then absolutely go ahead. You know?

That’s just as important as any money that you’re gonna make is is feeling like you’re not stressed, about potential losses.

Alright. So I am gonna take one more question because we’re coming up on on the, half hour. IRC twenty six said, on my platform, I bought the weekly. Do I have to cancel and redo?

That is up to you. Typically, when people make mistakes, I tell them to do that. This one’s a little bit different. If they make a mistake and they, you know, they they bought the spread instead of sold the spread, I say absolutely get out and and and redo that.

If the strikes are way off or the the expiration dates are way off, I say cancel it, you know, get out of it, and redo it. This is a little bit different. Basically, you’re just taking on, one more day of of trading. So rather than the option expiring at the end of, on on Friday morning and the last day you can trade it is Thursday afternoon, you you’ll just have to hold it until Friday, Friday’s closed.

So you have one more day. Theoretically, you should have gotten paid slightly more, I mean, really slightly more than trading the AM. So up to you. I wouldn’t I don’t think it’s a problem, especially if I’m I’m not sure exactly where the market is trading right now.

If it’s gonna result in a in a loss or more commissions, I wouldn’t worry about it too much. You can just trade that weekly. We we do look at the weekly. It was just that the open interest was higher on the monthly, so I wanted to get have a better opportunity for everybody to get in.

But if you got your trade executed on the weekly, I think that’s fine. And just, just know that on October seventeenth when we’re talking about this and we and I come on at ten o’clock and say we’re out of the position, because it expired, just know that you who who trade that weekly option still, will be holding it until the end of the day on Fridays. That’s really the only problem. So I’m gonna leave it here, but thank you all for joining us.

Let’s, now let’s come back next week, and, hopefully, we’ll be seventeen for eighteen at that point, but I’m not gonna tempt the trading gods, too much. So, like I said, hopefully, that will happen. But right now, market’s doing great, and, yeah, let’s, let’s book another winner this afternoon. So thanks for watching everybody, and I will see you soon.