Weekly Income Alert – October 3, 2025

Alright. Now it looks like we’re back. So thanks for hanging in there. Vic t said we should just headbutt it, and that that’s what worked. So thanks for the tip, Vic t. So Allison asked a a question about what expiring worthless means.

That means that the option went to zero, which is what we want. Normally, we’re buying options, and we want them to go higher. In this case, we’re selling options first, and then we want them to go to zero. And that’s exactly what happened or it looks like it’s gonna happen, I’m not counting that yet, For the October 3rd option, looks like it should expire worthless. We sold it for two thirty, and, assuming it expires worthless this afternoon, we keep the entire two dollar and thirty cent or two hundred thirty dollars per contract credit.

So really good stuff there. We’ve got the October tenth twenty three ninety, twenty three eighty spread. That’s doing really well as of let me see where it’s trading right now. I can tell you real quick.

So that one is trading at what did I say? The October tenth.

So that one’s trading at about fifty five cents on the last trade, and then which we sold that for two twenty two. And the October seventeenth, twenty three fifty, twenty three forty, we sold that at two twenty, and it is trading, that one is trading at about fifty eight cents. So portfolio is looking real good. Of course, you know, markets could go down, so never, never invest more than you can afford to lose, you know, all that caveat. But things are looking really, really good right now.

So, let’s just get to the trade since we took up some time with the technical difficulty. So I’m going to share my screen.

And by the way, thanks for those of you who who jump in and help answer each other’s questions. I I I really love to see that.

So, you know, when Allison asked that question about expiring worthless, some of you jumped in with a an explanation there while we were shut down. So that’s that’s really awesome. Alright. So we’ve got the October twenty fourth expiration is what we’re going to be trading. But first, let’s get to the Russell. We gotta give you the symbol here. So it is on Schwab again, dollar sign r u t.

Okay.

And then let me just I just wanna double check something, on my screen since we have been having some technical issues. Okay. Just wanted to make sure it it looked good. So, again, double dollar sign r u t on Schwab. On some of the other brokers, it might just be r u t. Sometimes it’ll say r u t w, and I’ll I’ll get to that on the Schwab screen here.

Excuse me. So in order to get the October twenty fourth expiration date on Schwab, you have to go to this drop down menu and select RUTW.

Okay. When you do that, that will give you all the various, expiration dates. Without choosing the w, you only get the third Friday of the month as an expiration. So we’re doing October twenty fourth, and I’m gonna do oh, this is pretty important.

Here where it says strategy, the default is call. We are not buying a call. We are selling a vertical call I’m sorry, vertical put spread vertical put spread.

So on Schwab, it says two leg spreads, vertical put, other brokerages that might say something slightly different, but the important thing is that we’re doing a put credit spread or a put spread.

So under let’s see. So we got vertical put spread.

And now why isn’t it giving me the default here where it gives me two of them? Let me see.

Oh, this is interesting.

So on Schwab, I don’t know if this is just something I’m just having a glitch on my, on my computer on my site, but, normally, Schwab in the past has defaulted to putting two legs in there automatically.

Let me just let me just see what happens here. Selling to open. I’m gonna choose the twenty four tens. That’s where I’m going with today.

Oh, I see what happened. It I don’t know if some for some reason went back to call. Let me go back to vertical put. Okay.

There we go. Don’t know why it went back to call. Alright. So we’ve got the vertical put spread here, sell to open.

Russell, it’s got gave me the wrong date again, so we’re going to the October twenty fourth. When you have the put spread, when you’re trading a spread and you load it as a spread, the, when you change one variable, the other should change as well. So we changed the, expiration date to October twenty fourth. This changed to October twenty fourth.

So now we’re going to choose the expiration, which is I’m sorry. The strike price, which is twenty four ten and twenty four hundred. So we’re selling the twenty four tens, and we’re buying the twenty four hundreds expiring on October twenty fourth.

Again, if you’re new, really, really important, we wanna put our limit right around this midpoint here. Okay? We don’t wanna do it at the market. If we did it at the market, you’re gonna get a dollar forty instead of a dollar ninety five. That’s a heck of a difference. Really, really big difference. So we always wanna have our limit right around this midpoint, because that’s basically the the fair value for this spread.

So, you wanna make sure you’ve got net credit in here. The limit price, as I explained, I usually bring my limit price down just a little bit under the midpoint, but that’s because I’m running weekly income alert. We’ve got a lot of people out there, and the way that, our tracking works if because I’m trading this with you. If I don’t if if my trade, my personal trade doesn’t get filled officially, it’s not filled on the track record.

So I’m always gonna on the side of being a little more conservative, taking the the slightly lower price for myself, in order to make sure that the trade is is official in our track record. So if you see a dollar ninety five in the midpoint, you know, you can go for a dollar ninety five. If you don’t get filled, you can bring it down a little bit. But I’m gonna bring mine down to a dollar ninety to make sure I get filled.

And, also, what that means is, many of you will have better results than our official track record because we are doing it pretty conservatively. So, again, we’re selling to open the October twenty fourth to twenty twenty twenty five, twenty four ten puts, buying to open the twenty four hundred puts. My limit’s gonna be a dollar ninety. I see a bunch of you are getting filled dollar ninety five, two dollars, even better.

So got that order reviewed.

Before I place the order, I’m gonna send out the trade so that anyone who is not on the stream with us right now will receive this before I place my order. So let me just fix that.

Good. I’m seeing, several of you getting filled at two dollars. That’s fantastic.

Alright.

I’m going to submit that to send out to everyone.

The trade has officially been posted, so now I will place my order, and I got filled right away.

So good stuff. So I will stop sharing the screen, and we can get to some of your questions.

So we’re, you know, as we’ve been doing, we’ve been, basically sticking around till about ten thirty. And when when we get a lot of new people coming into weekly income alert, then we typically will extend the the sessions a little bit longer because we get people with a lot of questions.

So, this is a really good question by TBE. With the one percent jump in the market this morning, should we be a little cautious this morning? And I was when I was looking at the prices of the options and, you know, which spread to choose, I was thinking about that. And I I typically will, you know, on the side of caution and where meaning that if, you know, the liquidity really isn’t there for a at a particular strike or, you know, if if that kinda three percent area that I’m trying to hit is somewhere in between the strikes, I’ll usually, choose the one that’s a little bit lower.

And so I was looking at some of the lower strikes today because the market was up.

But whenever you know, when you do that, you are sacrificing the amount of money that you’re gonna make. You know, the obviously, the more risk you take, the more money you make, the less risk you take, the more conservative you are, the less you’re gonna make. And when I was looking at even just, you know, another ten, twenty points lower, the credit was was starting to get quite low. I mean, I I we’re already at you know, I put my limit in at a dollar ninety.

You know, I really want to always be trying to get at least two. It’s not always possible, but going down another ten or twenty points, meant that we’re now looking at at likely a dollar seventy five, maybe even dollar sixty five. So I wanted to try to keep it as close to two as possible. So yeah.

So we’re so the market’s elevated for sure. Market’s been elevated for months and months, and, you know, we could kinda make the same argument every every week. So far, the market’s been cooperating, and and the system has been working quite well. But as I always say, we’ll we’ll manage the trade if things start to go against us.

But I wanted to try to get at least as close to that two dollar credit as possible. So, you know, when you’re trading it, if you ever would prefer to be more conservative, be my guest. Just, you know, understand you’re gonna have a smaller credit as a result.

Michael j got filled at two zero five. Really nice.

John m n says, how do I determine the strike price? So the in the back test, what we found worked the best was, about a three percent, trading strikes that are about three percent lower than the current price, and it’s not always gonna be perfect. As I mentioned, sometimes that that number will fall somewhere in between.

Sometimes I’ll look sometimes if there’s just not much open interest or volume in those strikes, I might adjust it slightly. But generally speaking, we’re looking for about three percent below because that’s what worked in the back test the best. You know, we tried all kinds of different numbers, different distances, different methods, and three percent was what gave us that eighty six percent, win in the backtest. And so far, seventeen out of eighteen, assuming we get that win today, seventeen out of eighteen in real trading. So so far, it’s been working, and, you know, we’ll we’ll keep keep on doing it until it doesn’t.

Alright. We’re getting a lot of people. Tb says, I was thinking maybe wait later in the day versus a lower price.

You could do that. I mean, you run the risk of the market going even higher. You know, often strength, you know, strength we get strength.

You also have this would be very, very slightly, but if you wait later in the day, that’s slightly less time till expiration.

And, you know, we’re only talking about three weeks here, so a few hours could shave a couple of cents off the price, that you’d be receiving. So, so that’s something to consider too. I mean, we’re probably talking pennies, but, you know, you you you definitely have an opportunity if the market pulls back a little of being able to get in at a lower strike, but you also run the risk that the market just is real strong. And we are in a bull market, and market’s hitting new highs on a fairly regular basis.

So that is a a a real risk that the market does go higher. And then if you wanted to stick to that three percent rule, then you’re actually buying or you’re you’re you’re selling your credit at a higher strike. Or if you had settled on a strike, you’d be getting less money for it. So, you know, there’s always there’s always something to balance, whether, you get more conservative or you you run that risk of the market getting away from you.

Let’s see. So Stan says, Russell’s sitting at a high level, which might create a triple top spanning four years if the current move would break. I know you’re a technical guy, but not for this service. What’s your take?

So talking about a triple top. For for those of you who are unfamiliar, triple top is when a stock or a market hits, the same high level three times, and and it’s it can be a bearish signal. I would argue that because we’re at new highs, we’re not really in a triple top situation right now. I mean, if the market tanked from this point, you might be able to look on and be go, okay.

It it was a triple top. We hit a high of twenty four fifty eight on the Russell in November twenty one, Then we hit a high of twenty four sixty six in November of last year, and now we’re at twenty four eighty eight. So we’re at a new high. It hasn’t exploded higher.

So if the market did turn around, I think, yeah, I I think you could be right and say, okay. That was a triple top. But, I’m I’m certainly not willing to call that at this point, and I’m not willing to, I guess, be scared of that at this point because the market has been so strong lately. I mean, here’s here’s, I think, a a really, good sign, and I mentioned this in today’s, technical pattern profits Friday forecast. You know, the government is shut down as we all know.

That’s not positive for a lot of reasons.

One of the reasons is that there’s a statistic I read. It takes fifteen billion dollars out of the economy every day.

So you’ve got this, you know, this this news item, this this current event that is negative, and yet the market keeps going higher. So the market is, as I often say, is a forward looking mechanism. It’s not a crystal ball. It’s not an absolute predictor of the future, but it is a forward looking mechanism.

And to me, it’s the market going higher even in the face of a government shutdown is telling me that perhaps things won’t be as bad as everyone fears. Doesn’t necessarily mean that the economy is gonna take off. It could, but to me, it’s saying that things may not be as bad as everyone fears economically. So when you have a market that’s strong in the face of bad news, that’s a real sign of strength.

So could could we hit a triple top? Could the market, you know, drop? Absolutely. There’s always that risk, but there’s nothing out there, and especially a technical pattern right now that is really giving me pause. I I I just see strength right now, and, and, yeah, the market, I’m not worried about a potential triple top at this point. So, a good observation.

And, I am looking at the technicals all the time, but I’m not seeing anything to be particularly scared of at this moment.

K Cole says E*TRADE doesn’t seem to have RUT.

So, anyone who’s on E*TRADE might be able to help out, k Cole, but, it could be dollar sign r u t, it could be r u t w, could be dot r u t. So anyone who’s on E Trade, if you wouldn’t mind, give that give k Cole, some help with what the ticker symbol is on r u on, okay. Jerry LL says it is r u t.

Ewalter says, if a trade expires useless or worthless, I don’t have to do anything. I only have to do something if we close out a trade early. Absolutely correct. So, kind of the the logistics of of what happens when you place a trade, you you place a a a credit spread trade, the money hits your account automatically. As soon as you hit that trade, that money is in your account. Now you do have a thousand dollars, per contract locked up. So you you you couldn’t just withdraw all the money, you know, while that that trade is going, or you have to have that thousand dollars in there to cover the trade because maximum loss, you know, the market tanks, a thousand dollars per contract is coming out of your account.

So so all that money isn’t yours to spend right now. But at expiration, when it expires, correct, you don’t do anything, and the broker essentially unlocks that thousand dollars. And at that point, you can, you can do what you want with it. So, you know, technically, you know, if if you receive two hundred dollars, say, you could take out two hundred dollars as long as that thousand dollars is still in there to be able to cover a losing trade if if one should occur. But, yeah, you don’t have to do anything. And at expiration, all the money that was involved in the trade or or that would be used to cover losing trade then gets released.

Yes. James answering the question. Thank you for being on that, James. I always send an alert if we need to trade, close a trade early, and that’s only happened once so far.

Hopefully, yeah, it won’t happen for, another long while. But, yeah, I I will send out an alert. It won’t be necessarily a broadcast alert like this. The actually, the one time we did, it was, I believe, on a Friday, so we did do it live and covered the trade.

It was and I I also it was just good timing in that, it happened on a Friday, but it was helpful to be able to show how to close the trade when we did it. But, essentially, it’s just very similar. Instead of sell to open, buy to open, you’re selling to close, buy to close, and and it should populate automatically when you close the trade, because it should feed the existing trade rather than kinda starting from scratch and building it the way we do when we open a trade. If you click on close a trade in your brokerage account, it should it should populate everything automatically, and then you just have to decide on the limit prices really.

That’s the easiest way to do it. But I will send out an alert for sure.

Kirk w o seven. Can you explain what happens if we let a Russell trade expire between the strikes? Does the baby get split, or is there a possibility of losing the protective put over the weekend?

So, no. You would not, you you would not lose the protective put over the weekend. So it’s based on the the closing price at, expiration. So closing price on a Friday.

There are some instances where it’s on a Thursday, on the third Friday of the month in some instances, and I and I always tell you when it is. But for the for this example, let’s just talk about Friday. So it closes at expiration on Friday. So let’s say, today’s trade, the twenty four ten, twenty four hundred.

Let’s say it closed at twenty four zero five.

So at that point, the option would be the spread would be worth five hundred dollars or or or I’m sorry. It’d be you would lose five hundred dollars on the trade, because I’m sorry. Let me back that up. That’s not correct.

You you technically would be down five hundred. But if you’ve collected two, you’d only be down three hundred. So the five hundred would be what, basically, you owe to settle the trade, but you’ve already collected two hundred, so you would be down, only three hundred. If it closed at twenty four zero one, you’d be down nine hundred.

You’ve collected the two hundred, you’d be down seven. If it if it closed at twenty four zero eight, then you’re down two hundred. You’ve collected two hundred, so you’d be at breakeven. So that’s how that works.

So depending on where it is in between that spread determines how much you’re gonna owe, to settle the trade. Because, remember, if if it’s in between, if it’s, let’s say, the twenty four let’s say, close at twenty four zero five, the put that you bought at twenty four hundred is worthless, but the put that you sold at twenty four ten is five points in the money or five hundred dollars. That’s how you would calculate that. Same thing.

Twenty four zero one, the twenty four ten put is worth nine points or nine hundred dollars. The put that you bought is worthless.

And but the that put that you bought is there, obviously, in case it goes below twenty four hundred. So the Russell’s at twenty three eighty. That put that you sold at twenty four ten is now worth thirty, but the put that you bought, at twenty four hundred is worth ten I’m sorry, is worth twenty. So the the loss would be ten and then minus the credit. So that’s how that works.

Alright. I’m gonna take one more question. Let’s see.

I’m just scrolling up here.

Susan g says my Schwab account won’t let me find the October twenty fourth option either. Make sure you’re selecting r u t w in that drop down. You wanna make sure that r u t w is what will allow you to do that. R u t will only give you the third Friday of the month. Those are called monthly options.

Anytime we’re trading an option that’s not on the third Friday, they’re considered weekly options. So, on that drop down menu, it will say RUTW rather than RUT.

I’ll go we’ll go for one more.

Yasmin says, would a bull call debit spread be equivalent to a bull put credit spread. So that would be a bullish position. Correct. But you’d be paying money instead of collecting money, and then the goal is that the spread would increase in value. So you’re absolutely correct. So it’s just the opposite.

The strategy for weekly income alert is to generate income every week, to have that money hit our account automatically rather than buy something and hope that it goes up. But, yeah, it it would be the inverse. A bull call credit I’m sorry. A bull call debit spread is equivalent to a bull put credit spread.

So, but you’re paying the money hoping for it to go up rather than what we’re doing, which is collecting the money and hoping that it goes to zero. So that’s the way that works. So that will do it for us right up against ten thirty. We’ll be back next week with the, October tenth edition, which will be expiring on Halloween, which should be exciting, and, we’ll actually be at the Oxford Club’s private wealth seminar, on that day.

So, hopefully, the Wi Fi in, the hotel in New Orleans, will be working on October thirty first, and we’ll be able to, to get that one out to you. But, that’s a few weeks away. So, great job trading everyone. Let’s make it eighteen for nineteen next week.

But, so psyched that you guys are making money, and I will talk to you next week.