Weekly Income Alert – August 14, 2026

Everyone to Weekly Income Alert. I’m Marc Lichtenfeld. So glad to see so many of you today. We’ve got, wow, over eleven hundred today.

A lot of new members, so I want to welcome all of you. So, yeah, eleven hundred people so far and climbing. We’ve got EVG from Long Island. Evg was first.

We’ve got, Mark one in Ohio. S. Times is on a flight. We’ve got people from all over the world, JL Horn in Bratislava, Eric F nineteen forty five in Antwerp.

So so great to see all of you here. Thanks for being here. If you’re new, the way this typically works is we, talk about the market briefly, then we go into the existing portfolio, then we place the new trade, and I show you exactly what I’m doing. You can follow along with me.

Then we get to questions. So if you do have questions, and I’m sure you do, typically, it pays to wait till after we’ve placed the trade because that’s when I’m looking at the chat and I can see your questions. Now we do have a lot of people here who’ve been with me for a while. And one of the really cool things about Weekly Income Alert is how much people help each other.

And so if you have a question, chances are not only do other people have the same question, but there’ll be somebody, either one of our moderators or very likely one of our members who can help you as well because they’ve been doing this for a while. So, that’s what I’m gonna do. And and if you are new, what I’m do today, a little bit different, is when we place the trade, I’ll then go back and show it to you again because I know it can go kinda quickly. So I’ll show it to you twice.

A few things, though, before we get started. I do strongly recommend if you haven’t, check out all the welcome materials, all of the videos and everything to make sure that you understand exactly what we’re doing and how we’re doing it. And that will be an enormous help to you and and, you know, give you, the information you need so that you can follow along when we’re doing it live. If you can’t do it live yet today, if, know, if you’re not comfortable with it, you don’t understand, or perhaps you haven’t been cleared for options trading yet by your broker, don’t worry.

There’s always another trade the next week. If you haven’t been cleared, what I suggest and this this happens to quite a few people at the beginning. If they haven’t been cleared and they’ve never traded options before this style, what I suggest is you make sure you’re up to snuff on all those welcome materials and you really understand what’s going on. And then you can basically appeal to the broker and say, look, I know what I’m doing.

I know what I’m talking about.

Ask me some questions. Let me prove that to you. Because basically the brokers are just trying to cover their behinds. Right?

They wanna make sure that if you trade and lose, you can’t sue them saying, well, you should never have let me do this. I didn’t know what I was doing. So that’s what they’re trying to avoid. So if you can show them, hey.

I know what I’m doing. I know what I’m talking about. Then there’s a chance that they’ll let you, trade. If they don’t, then sometimes you have to wait a few months and pay per trade.

We have a lot of people here in Weekly Income Alert that did just that. They waited a few months. They paper traded all the trades. They got very, very comfortable with the system, and then a time later, they were allowed to trade by their broker.

And, you know, we’ve we’ve been doing this for fifteen months now. We started in May of twenty twenty five. So like I said, there’s always another trade coming down the pike.

So with that said, let’s start talking about the markets and what’s been going on. So the markets are very, very strong right now and really, last couple of days, really started to lift off. We were you know, it was strong. Then for about the last five, six trading sessions, just traded kind of flat, maybe slightly grinding higher.

Had a good day yesterday and and moving higher. So that’s certainly positive for our positions. No doubt about that. The downside is that volatility is very low.

And so as a result, the credits that we receive when we sell these alerts are going to be low as well. So if you’re new, and those of you who are not new, are very familiar with this analogy that I’ve given, but if you’re new, we’re selling put spreads and we’re selling a put, which is essentially selling insurance to somebody. Right? Somebody else is out there who wants to hedge their positions or their portfolio, so they’re buying a put from us.

It’s just like selling insurance. So we want that insurance to expire worthless. When the market is strong, it’s like selling insurance to someone who wants to buy, let’s say, insurance on their house for three weeks, because we’re we’re typically trading, expirations that are three weeks out. Somebody wants to buy insurance on their house for three weeks, we’re the insurance company, and we see, well, there’s no storms brewing anywhere, so the rates are gonna be lower.

That’s exactly what’s happening here. Right now, the market is strong. Volatility is low. There’s no storms brewing out there right now.

It doesn’t mean it can’t happen, but it just means right now there’s nothing to be particularly worried about, so the rates are lower. If, as an insurer, we looked and there was a storm right off the coast, we would charge a lot more money for that insurance.

Same thing in the markets. If volatility is high, if the market is telling you there is a greater risk out there, then we charge more or we would receive more for selling that put, selling that insurance. So that’s exactly what’s happening here. So the positive, the markets are strong. Our existing positions are doing great.

The negative is that the credits that we’ll receive are lower. When markets are scarier and things are falling or volatility is higher, that puts some pressure on the existing portfolio. But any new positions, we make a lot more money on the credit. So that’s how it works.

So talking about the existing portfolio, we have a position expiring today at the close. That’s the twenty eight forty, twenty eight fifty put spread. And if you’re new and this will be your first expiration, we don’t have to do anything. We want positions to expire worthless.

When they do, you don’t have to do anything. You don’t have to close it out. It closes out automatically when it’s worthless. You just keep the credit and you move on with your day.

And frees up your capital. One of the common questions I get is how much cash do you need? You need a thousand dollars per contract that you’re trading. So if you’re gonna trade every week, you generally need four thousand dollars in the account because most weeks we are putting on a new position like we will today on Friday morning, but the position that’s expiring doesn’t expire usually until the afternoon.

So there’s gonna be that one day overlap where you’re gonna have four open positions. So what happens when a position expires worthless? That thousand dollars of capital that’s being held by the broker is now released. But when you when you sell the the credit spread, when we open a new position, that money hits your account right away.

So if we sell a credit for, let’s say, two dollars, which is two hundred dollars because everything is in one hundred increments, one hundred unit increments, that two hundred dollars hits your account immediately. But you have a thousand dollars in cash or marginable securities that is held in reserve by your broker. When it expires worthless, that one thousand dollars is released. So you don’t have to close out a position that’s expiring worthless.

If we need to close out a position early, then there are steps to take, and I walk you through that as well when we need to do that. I don’t anticipate that we’ll need to do that right now. We’re two hundred points away from today’s expiration, So, that’s looking really strong. Looking forward to next week, even better.

That’s the twenty eight twenty, twenty eight ten, strike prices. So, we need a we need a pretty big move in the market lower for that position to be in jeopardy. Doesn’t mean it can’t happen. We never tempt the trading gods with our hubris, but, it’s looking pretty good.

The position we put on last week, the August twenty eighth, twenty nine thirty, twenty nine forties, Again, looking good, but we have two more weeks to go. So, you know, we’ll we’ll deal with that as we get closer. But right now, the positions are looking really, really strong. So really good stuff.

Let’s get to today’s trade. Let me just take a look at where the markets are, do my quick calculation. So if you’re new, you know, I give you I give you the the secret sauce.

Basically, what we are doing is we are trading positions that are three weeks out and that are roughly three percent out of the money.

There’s not any magical, you know, magical mystical thing about the number three. It just happens to be where the back test showed the best results. We tried lots of different the different expiration dates. We tried lots of different distances from the current price, and three weeks and three percent was what worked the best in the back test.

It’s worked worked the best in real life. And we have been doing this in real life. We’ve been sticking pretty diligently to the system, and the results have been spectacular. If you’re new, let me just tell you what we have done in real life.

This is real trading going back to May of twenty twenty five. We have an eighty one percent win rate.

And not including today’s position that will be closed out, our average position weighted return is ten percent. It’s actually nine point nine four percent. So that’s earning nine point nine four percent every three weeks. So you’re basically over the past fifteen months, we’ve been earning the the rough equivalent of a year’s worth of stock market returns every three weeks.

So really, really sensational results. And because of that, that’s why we stick with the system. So I get a lot of people saying, hey. Can we can I do a different strike price?

Can I you know, should I do something else? You can do whatever you want. It’s your money. I’m sticking with what has worked really, really well, because the results have been very consistent with the backtest, and, you know, those results, as I said, are have been fantastic.

So let me share my screen with you so I can walk you through the trade.

Alright. So let me just make sure that is being shared. Alright. Great.

So we are going to so I’m using Charles Schwab. If you’re with a different broker, it’s gonna look a little bit different, but but the the mechanics are pretty much the same. So you’re gonna go to trade and options.

Okay.

Here is one weird thing about trading these index options.

When you trade a stock, you’re trading Nvidia and you’re on Schwab, you type in NVDA. If you’re on Vanguard, if you’re on Fidelity, if you’re on TastyTrade, whatever you’re on, it’s the same. Indexes are a little bit different for some reason, and I honestly don’t know why, but for some reason, brokers have different symbols for the indexes. So it will not be necessarily consistent across all brokers.

So on Schwab, the Russell is dollar sign r u t. On Vanguard, it’s dot r u t. Every broker is gonna be little bit different. So, James, if you wouldn’t mind, if you haven’t already, if you could post the link, we do have a list of the different brokers and what their ticker symbols are for, the Russell two thousand.

And if you don’t see your broker on there, I’m sure there’s somebody here in the chat that uses that broker, so feel free to ask them, and, they’ll they’ll let you know. But, yeah, thank you very much, James. James just posted the link to that to that, list of brokers so that you know what your broker uses for the Russell. So again, in Schwab, it’s gonna be dollar sign r u t.

And the default here is a call position. That is not what we want. We are trading vertical put spreads. You see here it says two leg spreads.

We are trading vertical put spreads. So what we are doing is we are selling a put, and then we are buying a put that’s below the strike price. So you wanna do this together. Now you can do it one at a time where you sell one put and then that option fills, that trade fills, and then you put in then you place an order for the next one.

I don’t recommend that, though. I mean, mechanically, you can do that, but I don’t recommend it. You wanna do it together because that way you make sure that the entire position is filled because we don’t wanna just be short a put with, with no protection. When we buy the put below it, that is that is our protection so that if the market, you know, does fall and it falls hard, we don’t take a massive loss.

So it’s really, really important that you do it together. And when you do it together, you’ll be able to see, the what the fair price is for the entire spread, as well as when you change a variable, it will change it for everything. So we’ve got dollar sign r u t. Now here’s where it gets a little strange on Schwab.

The expiration dates.

So for r u t, you can see here we’ve got August twenty first, September eighteenth, October sixteenth, etcetera. Those are the third Fridays of the month. Those are called monthly options. Those are, historically the only strike prices that were available. You could only trade options that traded that expired on the third Friday of the month. That has changed in recent years.

In order to get other expiration dates, you need to go to this drop down menu and choose r u t w, and you’ll see a lot more expiration dates. Now if you put r u t w here on this is, again, this is Schwab specific. You’ll get an error message. It won’t work. So you have to put in dollar sign RUT, then choose RUTW here. Different brokers, like I said, will have different ways of choosing that.

So we are going with the September fourth expiration. That’s three weeks from now.

And I want to show you something real quick. You see, right now it says August twenty first. If we change the first one to September fourth, it automatically changes the second one. Again, that’s why we wanna enter this as a spread, not one at a time, because it reduces the chances for error. So if you’re doing it one at a time, you might have September fourth here and forget to change this. So having it as a vertical put spread will change the variables at the same time. So it just reduces your chance for error.

So we are going to trade the twenty nine seventies. We’re gonna sell the twenty nine seventies, and we’re gonna buy the twenty nine sixties. And you can see the credit’s pretty low. Right now, this is, the lowest it’s ever been since we’ve been doing this, trade.

Typically, it is over two dollars, but, again, volatility is very, very low.

Now here, if you’re new, this is where it it might be a little confusing. You see fifteen eighty, sixteen fifty, and the midpoint sixteen fifteen. If you were simply trading this one put, the twenty nine seventy, and you’re buying it at the market, you’d buy it at sixteen forty. If you were selling it at the market, the bid would be fifteen ninety.

The midpoint between these two is sixteen fifteen. Same thing here on the bottom. The midpoint’s really important. You can see these spreads are pretty wide.

If you were gonna trade the spread at the market, if you were gonna sell it, it would be a dollar twenty.

The midpoint right here is a dollar sixty five. That is much closer to what the real value is. We never ever, ever, ever trade these at the market. You will get too low of a credit, way too low.

This is a big difference, one point six zero and one point two zero. You know, that’s a twenty five percent or thirty three percent difference. And you can see it’s jumping around a little bit and it always will jump a little bit. But you can see it’s a massive difference.

So we never trade these at the market. And if we have to buy them back, we don’t buy them at the market. We’re always going for somewhere in this midpoint because that is the real value of the spread.

The thing is, though, this doesn’t guarantee you this price. This just tells you kind of where it is. So when we place that trade, you’d be sometimes have to wait. Sometimes it’s it it can be a few minutes.

Sometimes it can be a few hours. Sometimes we have to go back and change the price. And if we have to go back and change it, then I send out an alert and let you know. So typically, as we’re on this broadcast, I’m watching it.

If I need to to make a change, I will. But usually, I’m giving it some time because it can take a little bit of time to get filled. And there’s sometimes we don’t get filled until roughly lunchtime on the East Coast. So it can take a little bit of time.

So do be a little bit patient and wait. And don’t panic if you don’t get filled. Like I said, I do send alerts out. If you don’t get any more alerts from me, that means we did get filled.

And when I say we, if I get filled, then we are considered filled on the official track record. Doesn’t guarantee that you will be, though for some reason I tend to get filled after other people do.

I don’t know why, but it seems like I often do get filled a little bit later. You’ll see in the chat people saying I got filled, I got filled, and I haven’t been. So what I wanna do here this has been bouncing around between one dollar fifty, one dollar sixty, one dollar fifty five. I’m gonna I’m gonna try to get a dollar sixty out of this.

Again, we’ll change it if we have to, but the the prices are so low right now. I wanna try to get every nickel that we can. So I’m gonna have our limit prices a dollar sixty. That means that you will not accept less than a dollar sixty for this trade.

So again, right now it’s a dollar fifty five, but it’s it’s bouncing a little bit. You know, the market’s gonna move up and down a little bit, and that’s gonna affect these prices.

So I’m gonna go with one point six zero and see if we can’t get filled here. So again, we are selling to open the September fourth, twenty nine point seven zero puts, buying to open the September fourth, twenty nine point six zero puts, and CR, that’s credit. If you see a debit, then you’ve done something wrong. You you might have had these numbers inverted.

You always are selling the higher strike price and buying the lower strike price. Okay? Really, really important. If you see debit, something is off.

So take a good look at this and make sure you’re doing it right. We are never doing a debit to open the position. A debit means money’s coming out. This is weekly income alert.

We’re collecting income every time.

So I’ll click review order.

And then normally I would place the order and then send out the alert to everyone.

So actually so you can go ahead and place a trade. I am gonna send the alert out to everyone, but then I’m gonna walk through this one more time for those of you who who need some more help. So let me just send this out to everybody who might not be on the broadcast.

Okay. I have sent that. Let’s see. Is anybody getting filled? Filled a dollar fifty five, filled a dollar seventy three. Nice.

And you’ll see sometimes people get filled at different prices. Depends on on your broker. I don’t think any one broker is better than the next as far as execution. It’s kind of the the luck of the draw to some degree.

So let me go back and place this order one more time or show you the order one more time from scratch so you can see how to do it if you’re new.

Okay. So again, we go to trade, options.

Okay. Again, Schwab dollar sign r u t.

Then we’re going to vertical put. So two leg spread vertical put. It’s a two leg spread because we are selling or we are we’re trading two puts.

We have to go to r u t w on Schwab to get these other strike prices to get the September fourth. We choose that. It automatically changes here. We’re going to the twenty nine seventies.

We’re selling to open the twenty nine seventies, buying to open the twenty nine sixties. You can see the midpoint here is a dollar fifty. I’m gonna try to get a dollar sixty. So I change that here in the limit price.

I I didn’t go over this. The timing day or good till canceled, I only do day. Good till canceled means this is open until until you you cancel it. We don’t wanna do that.

We don’t want to, have this open and then let’s say Monday morning the market is is very different and the credit is, let’s say, worth two dollars, but you said you’ll accept one point six zero and you get filled at one point six zero So we have this expiring at the end of the day. And then if we need to make the trade on Monday, if we never got filled, then we can do that on Monday. That’s actually what happened this week. We for the first time since we started last Friday, we did not get filled on Friday.

We did get filled on Monday. So I’m gonna review the order.

And now I’m gonna place the order myself.

So with that, we saw that the midpoint was one point five five dollars I assume I did not get filled, I’m gonna check right here and see.

Yeah, so I’m still open here. You can see open.

Midpoint is one point five zero dollars My limit price here is one point six zero So I’ll keep checking that and let you know if I get filled. Like I said, if I don’t get filled, at a certain point, during the day, if I need to change the price, then I will let you know, what the new price is. I’ll send an alert. So keep an eye on your inbox or your phones.

So m Randall says, looking to get filled, dollar sixty five. It’s really bouncing around. Be patient. If not filled by noon, then I look to adjust. And that’s pretty much what I usually do. I I pretty much give it a couple of hours and then look and see where the market is and if I need to adjust either the the price or sometimes we need to adjust the strike. If if the market has moved significantly, then I’ll adjust the strike price as well.

But, yeah, we’re we’re patient because it is quite common to get filled an hour or two later. It it happens fairly regularly.

If doing a put spread, does the sell to open go first and then the buy to open leg? Or since it’s a spread, it does not matter. Fidelity automatically shows the buy to open first. As long as you’re trading it as a spread, it technically doesn’t matter.

I like to have the sell to open first with the higher strike just just so that, I don’t know. It’s it’s the way I’ve done it. And since I’m selling a credit spread, the sell price, you know, is, how do I how do I put it? Guess in my in my mind, we’re selling to open a credit spread, so I like to have that sell order first.

But as long as you’re doing it as a spread, it doesn’t matter. And you can change it. You can where it says buy to open, sell to open, you should be able to change that to sell to open, buy to open if you choose. But, again, as long as it’s a spread and you have the right strike prices, it doesn’t matter.

If you’re trying to follow along with me and you see buy to open first, then you really do have to make sure you get those strike prices right. And if the buy to open is is gonna be lower than the sell to open strike, because the sell to open strike is higher. Again, use that insurance analogy. We are selling insurance to somebody, and then we are buying our own insurance like an insurance company buys reinsurance to offset some of our risk.

So we’re gonna buy cheaper insurance than what we’re selling for. That’s how we make money. That’s how insurance companies make money. So, that’s really, really important to make sure that, if you are buying to open first in the way that’s set up, that that strike price is lower.

Let’s see.

If you have a ten dollar spread, aren’t you risking a thousand dollars? Great question, Byron Hobb. So yes and no. Not actually, no.

If this trade becomes a maximum loss, a thousand dollars comes out of your account, but you’ve collected a credit that you get to keep. So your maximum loss will always be a thousand dollars, that’s per contract, a thousand dollars minus the credit. So in this case, if we get filled at a dollar sixty, your maximum loss would be eight hundred forty. If we get filled at two dollars, it would be eight hundred dollars If we get filled at four dollars, your maximum loss would be six hundred dollars And that begs the question, well, why would I risk eight forty dollars to make one hundred and sixty dollars this week? And it’s a very valid question.

The reason is typically this service goes on streaks. So think we started off with fourteen wins in a row when we launched. Then we hit eleven in a row recently. We took a loss a few weeks ago, and so now we’re thirteen out of fourteen.

So when you’re winning, you wanna be sure you’re collecting all of those credits, even if they’re smaller credits.

So that’s important. The other thing is that not every loss is going to be a maximum loss. The loss we took a few weeks ago was a seventy dollars loss, not an eight hundred dollars loss. I got us out early.

It would have been an eight hundred dollars loss had I not gotten us out early or close to eight hundred. I forgot what the the credit was at that time. But it I got us out early. I won’t always be able to do that if the market absolutely tanks.

Sometimes it happens quickly and we do take the maximum loss. So do be prepared for I do want to set expectations appropriately. There will be times we take the maximum loss where either we can’t get out early or I just didn’t get out early enough.

It will happen. But there are plenty of times where it doesn’t happen and we’ll get out early.

So we’re not always taking that maximum loss. So eight forty dollars to make one hundred and sixty, I can understand where there’d be questions. But, you know, like I said last time, we we only lost seventy. So, you know, would you risk seventy dollars to to make two hundred?

You might. Now I can’t guarantee that you’ll only lose seventy. And I also caution that if the position goes in the red, you don’t automatically bail out of it quickly because these positions do fluctuate quite a bit. And if the market doesn’t just go straight up, these positions go into the red, especially if the market is even if it’s going down a little bit, if volatility increases, that may increase the value of the spread even though the market might be drifting in our direction.

If the volatility goes up, the prices on options go up. So you might see, hey, you know, the Russell is down a few points, which is what we want. I’m sorry, which is not what we want. The the Russell is down a few points, which is not that big of a deal because it’s not moving a lot, but volatility is higher. So why you know, so it means that our options are gonna be worth more, which means your positions will show a loss, you know, an open loss.

As time goes by and these options deteriorate, and they decay because time value is an important part of option pricing, so as we get closer to expiration, those options decay a lot quicker, which, again, is what we want. We want these options to go to zero. We sold it at a dollar sixty. We want it to be worth zero at expiration.

So as that happens, that will as long as the market isn’t tanking, those options will start to decay faster. So we’re typically really not taking any action, even if the trade has gone against us, until about the last week because we wanna give it as much time to work out, not only because of that decay, but because that’s also what the backtest showed us. When we did the backtest, again, with an eighty six percent win rate, And the back test, we took maximum losses every time we took a loss. We never got out early.

So that showed an eighty six percent win rate letting it go to expiration every single trade. So again, it’s why we wanna try to give it as much time as possible. I don’t think I’ve ever closed out a position in the first or second week. It’s always the week of expiration where I felt, alright, let’s get out early, so that we don’t take the maximum loss.

But I’m trying to give it as much time. So, again, setting those appropriate expectations. There will be times we take a maximum loss, but not always. And so that’s why it is worth it to make a little bit of money even though the risk might be higher.

Does the back test show the smaller credits were more likely to expire worthless? That’s a great question. I don’t know if we have looked at that. I would guess yes, because when the credits are much higher, volatility is higher, so that means that there’s more risk in the market. But that’s a good question. I should go back in and take a look. But guess that yes, because there’s less risk in the market at that time.

Jeffrey F. Says Fidelity has given me the following message. Your order will leave your account with an uncovered option position in cash. Please review your order.

To me, that sounds like you may not have bought the put underneath it. I’m not one hundred percent sure, but that’s what it sounds like. It sounds like you might have only sold the put and not bought it. So make sure that positions are, that you place an order with both positions. If not, talk to your broker.

Do your backtest include doing these trades every week even for such a low credit? Yes. We did not skip any weeks, just because the credits were low. Absolutely.

E Trade does not offer vertical put spread.

I’m sure E Trade there’s a way of trading these on E Trade. Maybe it’s called something else. See if it’s called a, a put credit spread, a bull put spread. Those are other names for it. Or it might just say spreads, and then you would as long as you set it up the right way. But I’m pretty sure E*TRADE does have a way of doing that. If anybody does trade on E*TRADE and let David G know perhaps what it’s called, that would be really appreciated.

Great question. Tom C. I know increasing the spread to twenty points increases the margin amount to two thousand dollars per contract, but when the premium with a ten point spread is so small, what do I think about increasing the spread to twenty to capture more premium?

So what I always say is look at your money, so you need to do what works for you.

If you do that, yes, you’re gonna get a larger credit, but you are increasing your risk. If the trade were to go against us you suffered a maximum loss, now you are looking at a two thousand dollars minus your net credit. So so let’s say your net credit was was three dollars. So now you’d be you’re risking seventeen hundred dollars, to make three hundred.

I don’t know if that’s that’s the case. I’m just pulling that number out of my head. So your risk is higher. So you have to be comfortable with the risk of a two thousand dollars minus the net credit loss.

I have not changed that since we’ve started because, again, I’m sticking with what works. The backtest had that amazing track record. Real life, so far, we have this amazing track record. So I’m sticking with what works.

I’m not changing that. The other thing too is I approach everything from a risk perspective. You know, how much can you risk?

And are you comfortable with risking? So that’s how I look at it. Not how much do I wanna make. How much can I afford to lose?

And then I position size accordingly. So that’s how I handle that because the wins take care of themselves, and you never wanna get into a position where you have risked more than you can afford to lose or that’s gonna make you lose sleep. You know, that’s really important too. Even even when trading systems work really well, if you’re stressed and up at night and you’re watching the futures in the middle of the night because you’re worried, that’s no good.

So manage the risk and the wins will take care of themselves.

Could I buy and sell each put individually since I only have a tier one option? You can. Like I said at the beginning, you definitely can. It’s better to do it together if you can’t if you if you are able to do that.

Sounds like you are not. So just make sure that you are not exposed where you have just, you know, one side of the trade. You want to just be long a put because we’re bullish right now. So if you’re just long put, that’s a bearish position.

So that’s the opposite of what we want. And if you just sold a put, then you have unlimited risk, which we don’t want. So make sure that you get those trades done as close to together as you can.

Let’s see.

What was your trade with the iron condor trades that you did a while back? I have to go back and look, how we did with those.

I think they were mixed because, if I remember correctly, you know, we got in as the market was falling. So I think we I think we did capture some wins, then when the market reversed, it caught us for some losses when it went on the upside. An iron condor, if you’re new so as you can see right now, we’re trading these put spreads, are bullish. An iron condor and I’ll walk you through it when it happens.

When markets are little bit more uncertain or are falling, we can add a bearish position on top of the bullish position, and then we get double the credit, which is nice. The other thing too is when we do that, volatility is higher, so option prices are worth more. So when we did it, we trading we were getting credits in the fours, fives, and sixes. I think the highest we got was six ninety. So that meant that our risk was only three ten dollars because we were collecting a six ninety dollars credit.

So we do that when the market is a little bit more uncertain, when we’re concerned you know, when we’re not as bullish as we are now. I don’t do it a lot because, again, the track record and the backtest. You know, we backtested this in a variety of markets, and the backtest was exceptional even just having these bullish positions on. So it’s gonna take a lot for me to switch.

I have done it. I have put on iron condors, but it’s gonna take a lot. And it’s not gonna be if you’re new, I’m not sitting here and I look at charts and the markets all day long. I’m not sitting here saying, well, you know what?

I see this one indicator starting to roll over. I’m gonna change things up. I need to be pretty sure that things have changed dramatically in the market, that this uptrend that we’re in is changing, that we may be entering into a corrective phase. I’m not trying to play just little moves here and there.

So what does that mean? Again, I wanna set expectations appropriately. I’m not gonna be the first guy to I’m not gonna top the market with with an iron condor. The market will have changed. We’ll likely take a loss before I make that change. Or it looks like we may take a loss before I make that change.

But when we make that change, that should generate some significant credits and minimize our risk so that even if we’re wrong, our risk is going to be much lower than when we have a bull put spread. So when we have an iron condor, there is still risk. The market, you know, absolutely tanks. We could still lose money. But having that extra credit that we are receiving, makes the risk lower, generates a higher credit, and reduces the chances of a loss as well. So, yeah, it’s it’s so I I do like the iron condors when we need them. But for the most part, especially in this market right now, market is really, really strong, and so we we remain bullish.

So, again, Jackrabbit. What is an iron condor? So right now, we’re we’re trading bull put spreads. An iron condor is a bear call spread.

We’re basically just doing the opposite with calls. We are selling calls that are higher than the strike and buying a call that is even higher than the one that we sold to protect us if the markets take off. It’s a bearish position. And in iron condor, we are taking both a bearish and a bullish position.

And as long as the market settles anywhere in between these parameters of three percent to the downside, three percent to the upside, we keep all the money, which is great because they’re they’re much bigger credits. But, if it goes above the call strikes, that could be a loss. And if it goes below the put strikes, then that would be a loss as well. But again, we’ll get to that when we need to, and I’ll walk you through exactly how it works.

And then to give you even more information, to be drinking more out of a fire hose, if if we’re ever in a bear market, we don’t have to do an iron condor. We can just take bearish positions with bear call spreads. That’s an option too. But, you know, right now, I don’t see that happening anytime soon.

Leonard seventy three says, the middle is so low. It makes no sense to risk at such a low price. Again, I understand that sentiment. I would argue, though, you know, if if you can win five, six, eight, ten, twelve times in a row, even earning low strike low credits, it’s it’s worth it.

To me, it’s worth it. And and that’s kinda how this system has been running in these long streaks. So, you know, if if you’re only gonna do it when the credits are higher, that means volatility is higher, so your risk is higher. So again, there’s no guarantee that because the volatility is low, risk is low, that the position is a winner.

Of course, there’s no guarantee, but the odds are better.

So if you’re only trading when the risk is higher, your win rate is probably not gonna be as high, and you will miss out on some of those lower credits that, you know, kind of feed the beast and and take the sting out of some of the losses that may happen sometime down the road. And, you know, it kind of builds that nest egg. So if you, you know, if you start at you have five thousand dollars in the account and you build it up to six thousand dollars and then we take a loss, let’s say, of six hundred dollars so now you’re down, to five thousand four hundred dollars, you know, having those small wins all along the way built up that nest egg so you can withstand the loss.

So Brooke B, love this. Thank you. Thank you, Brooke. Started in last August, and even with the bumps, I’ve kept seven thousand in premiums, just with one to two lots.

Yeah, I love that. That’s, you know, that’s real money there, seven thousand dollars And and, you know, acknowledging that, yeah, there are gonna be some losses. Like I said, the backtest, eighty six percent win rate in real time. We have an eighty one, excuse me, percent win rate.

So there are going to be losses, but these wins do pay for the losses over time.

Joe Miami says, would be cool to trade this SPY as well.

Waiting for you to introduce that new trade.

Yeah. So we are looking. Believe me, we are looking. We would love to have a new trade.

The Russell two thousand is what worked better, most likely because the volatility is a little bit higher, so we get, you know, we we get a little bit more premium.

The the trading the S and P five hundred did not work quite as well. So, that’s why we traded the we traded the Russell. We are looking constantly for a way to introduce a new trade, just haven’t found something that is, working, quite as well that we feel confident. You know, this is working so well. I don’t wanna introduce something that we’re not real confident is going to improve our track record or at least match the track record.

One thing I do want to talk about alright. Let me let me get to this question first. Rob Wall, please repeat today’s trade. I cannot type that fast.

I am disabled. So you can look at you should have seen in your inbox or on your phone, I did send the alert out, but we are, I’ll go through it again. We are selling to open the Russell two thousand, September fourth, twenty nine seventy put, and we are buying to open the September fourth. It’s always gonna be the same expiration date, twenty nine sixty put.

And the limit price we’re trying to get is a dollar sixty.

So, and by the way, there there this is recorded, so a recording does go out, in a few hours. So if you ever miss, the broadcast, you’ll be able to see it, you know, within a few hours.

So the thing I wanted to mention about the Russell two thousand. You might say, why do we trade the index? Can I trade the ETF instead?

You could trade the ETF. There are a few disadvantages. One, it doesn’t match up perfectly to the Russell. So the Russell right now is at thirty point six four.

IWM excuse me, is at three zero four. So it’s not a perfect match, so the strike prices won’t match perfectly. You’d have to do a little bit of math again to come up that three percent. But here are the advantages of the Russell two thousand versus the ETF, and this one’s a very important advantage.

When you trade an index option, you cannot be assigned early. So if the trade goes against you and you’re trading a stock or an ETF, it can be assigned to you. So let’s say you are short a put. If you’re short the IWM put, the ETF, let’s say you’re short at two ninety and the market tanks and IWM is at two eighty, at any time before expiration, whoever bought the put that you sold can assign it to you, meaning that you are in the hole and have to buy IWM at two ninety even though it’s trading at two eighty.

That cannot happen with an index. It cannot be assigned early. The other thing, too, is because an index is it’s not a physical thing like IWM or a stock where shares can be put to you, can be assigned to you, you have to buy them. They go into your account.

You cannot buy the Russell two thousand index or the S and P five hundred index itself. You can buy proxies like these ETFs, but you cannot buy the index itself. So what happens is it’s a cash settlement. So like I said, if the trade went against us at expiration, a thousand dollars would come out of our account if you have a ten point strike.

If had a twenty point strike, two thousand dollars. But it’s a cash settlement, and it only happens at expiration. Cannot happen any time before that. So that’s a big, big benefit of trading the indexes.

The other, and this is a nice little feature, is that there’s a bit of a tax advantage. So when you trade, let’s say, an ETF or a stock and trading it this way, let’s say, with three week strikes, those are short term capital gains. It’s taxed at your ordinary income tax level. Index options, sixty percent of the gain is taxed at the long term capital gain and forty percent is taxed at short term.

So over half of the gain is taxed at a lower tax rate. So if you’re making money, and everybody who has been with me for, you know, since we’ve started, has been making money, then their taxes on on these credit spreads should be lower than other active trading profits that they may have. So that’s a nice little feature of the index opt. That’s not necessarily why we do it.

The main reason is the backtest and also the inability to be assigned early. That is a huge, huge advantage over trading ETFs and stocks.

Coach D, can you close any time on these? Absolutely. You can close any time. Just because you can’t be assigned early doesn’t mean you can’t close any time you want.

And so we like I said, we have closed positions early. Usually, we’re not taking profits early unless unless I’m getting real worried that we’re about to swing from a profit to a loss, and it’s getting close to expiration. But, if we close early, it’s usually to make a smaller loss. If things are looking good, I’m trying to let it go to expiration so that we can keep every penny that we have of these credits.

But yeah, we can close any time early.

Gino asks, can you give me the tax IRS code that applies to paying less for the index options?

It’s a number, and I don’t remember it offhand. I can look it up and bring it up. It be in one it may be in one of the reports in the welcome materials.

I believe it is. I’m not one hundred percent sure, but I believe it is. So you can take a look at those reports and see. If not, I’ll try to remember to mention it next week.

Renee Lynn, twelve fifty six, I think. That sounds familiar. Yeah.

How do you calculate the risk on a trade? So if you’re trading ten point strikes the way we did, twenty six point seven zero and twenty nine point seven zero, twenty nine point six zero, your maximum loss is one thousand dollars minus the net credit. So if we get filled for one point six zero that’s one hundred and sixty dollars it’s one thousand dollars minus one hundred and sixty dollars So your maximum loss, your risk, is eight forty dollars If we’re collecting two hundred dollars your maximum loss would be eight hundred dollars If we’re collecting five hundred dollars your maximum loss would be five hundred dollars And that’s per contract. Obviously, if you’re trading two contracts, would double that. Five contracts, you multiply that by five.

Has there been a backtest using five percent call credit spreads with three percent put credit spreads? How do you backtest? Is that something we can do?

I’m assuming so. I don’t remember every single variable and mixture of variables that we’ve backtested.

I assume that seems like a pretty reasonable one, so I do assume that we have tested that.

How do we backtest? We have systems that we, you know, very expensive systems that we have used.

Our director of trading, Anthony Summers, who is usually on these chats as a moderator but is on vacation, finishing up vacation today.

And by the way, Anthony also will occasionally host when I’m unavailable. So you’ll get to know Anthony very well. But he’s the one that created the backtest, and ran it. So, I don’t know.

I mean, if you’re a computer programmer, you may be able to backtest it. I’m not sure, what other systems are out there for, retail investors to back test it. I’m sure there’s a way of doing it. I just don’t know what it is offhand.

Still cannot find vertical put spread in E*TRADE. Yeah. If anybody’s on E*TRADE and can help Mike, and I know somebody else was asking about it, of how to set that trade up, that’d be really helpful.

Let’s see. I modified my unfilled order and reduced it to one contract each. Now it says custom two leg instead of vertical put spread. Is there something wrong?

I’m not sure. I would say make sure that it says, you know, one contract, sell to open, you know, the twenty nine point seven zero put, and buy to open, the twenty nine point six zero put one contract. Make sure, you know, you have one contract for each and that you have, you know, both the long and the short put in there. If anything doesn’t, you know, look exactly like that, then that would mean something is wrong.

On my Schwab account, there’s no September fourth date option. So remember to go to r u t w. So let me show you how to do that again. So let me, let me just see if I got filled yet.

Nope. I still haven’t gotten filled yet.

Let me show you one more time where to find that r u t w.

Okay. So on Schwab so you have to start by entering dollar sign r u t and vertical put. Then here, this section right here where it says option symbol, that’s where it says RUTW. And then when you do that, you’ll see these different expiration dates.

So that’s how you do that.

Alright. What other questions do you guys have?

See, Russell’s really moved up. May need to adjust strikes. It’s a thirty-sixty one right now. I think that’s about where it was when we put in the order.

Yeah. But if if it changes, if if we need to make some changes, I will certainly let you guys know. And by the way, if things change and I have to change the trade, where I have to change the strike, then even if if the new strike price is the official trade in the portfolio, I know that there are people who got filled at an earlier strike that this happened last week, then I’ll I’ll still continue to follow that trade and and, you know, the the earlier trade, the original trade, and let you guys know if any action needs to be taken. Even if something has to happen with that trade but not in the official track record trade. Doesn’t happen very often. Think last week might have been the first time, we changed strikes, if I remember correctly.

Does your return percent take into account commissions? Great question. It does not. Commissions are pretty low, typically with trading options. I think on Schwab, it’s, I end up paying like a dollar and a half, which I guess on, you know, a dollar sixty, a hundred sixty dollar credit is is one percent. But, you know, very often the trade is, we’re getting in the twos or higher, so it’s it’s less than one percent. But no, the official record that I have does not, does not take into account commissions.

Let’s see.

Is there a reason we why we only do one contract? And Jackson b answered, yeah. How many trades you do is up to you. Again, all about risk.

So, I only do one because I don’t I don’t wanna there’s so much volume coming into the into the trades at once. I don’t wanna add to that volume, by trading ten, twenty, thirty contracts. I I know there are plenty of you that trade that many, and then we have a lot of people trading one or two contracts. So I don’t want to add to that, which brings up another question that a lot of people ask.

Hey, won’t we move the market? Won’t the market makers see all these trades coming in and move it? It really doesn’t happen with these index options. If we were trading, let’s say, a small cap stock, individual stock that doesn’t have a ton of open interest or volume and a ton of orders came in, yeah, the market makers start playing games.

But because these are indexes, we really don’t see that. So I have not seen any any indication that market makers are playing games. And and believe me, I’m not a fan of market makers.

I was a trader on a trading desk battling these market makers for several years. When I place trades or recommend trades in some of my other services, I can sometimes see the market makers screwing around. I’m not a fan of them, and I’ll be the first to throw them under the bus. I really don’t see this happening in this service. Indexes are just too liquid, too fluid, and that’s not really a problem here.

But that being said, yeah, I don’t want to just pile on. But you should trade as many contracts as you are comfortable with. If you’re new, I do recommend starting with one just so you get the feel of it, so you are confident you’re not going to make a mistake, and then you can always increase it.

I cannot enter my what did I do, Ryan? Can I enter not enter my trade even if I follow your instructions? Since I can’t see what you did, I I really am not sure. You can always reach out to your broker and ask. You know, explain this is the trade I’m trying to do. It’s the Russell two thousand.

Sell to open the twenty nine seventy put, buy to open the twenty nine sixty put as a put spread, and, and, you know, for whatever reason, it’s not going through. I’m not sure, what you’re seeing on your screen.

Let’s see. What else do we have?

To show it again with the RUTW. Yeah, I’ll walk through the whole trade one more time because I know this is new to a lot of people.

Let me just get that set up.

Okay. Let’s get this going.

Okay. So this is the the original screen. Again, you got the dollar sign r u t, vertical put.

We’ve changed this. Remember, the default is r u t. We are changing it to r u t w, and that brings us to the other expiration date. So we say September fourth, and we are doing the twenty nine seventies.

We’re selling to open the twenty nine seventies, buying to open the twenty nine sixties.

And you can see here the credit right now, dollar fifty. We changed it to a dollar sixty in the limit price. Order type net credit here. You can see credit, so you know that you’ve set it up correctly. And then you click review order.

And, yes, and you can see my commissions here on Schwab. It’s a dollar fifty or I’m sorry. What is it? A dollar sixty two, is my commission. So, yeah, about one percent, but I’m pretty sure that has been consistent. So even when we’re trading, you know, and getting much higher credits, it’s a a much smaller percentage.

Let me just see if I got filled yet. I’m gonna guess I haven’t.

Yeah. I’m still open. So, again, this happens all the time. Not too worried. I’ll send an alert if I need to. But, very often within a couple of hours, I do get filled.

Let’s see. What other questions do you have?

Not exactly sure what I did on Robinhood. RUTW twenty nine sixty. Put nine four to buys. RUTW twenty nine say two sells.

Yeah. So you’re selling two puts on the twenty nine seventies. You’re buying two puts on the twenty nine sixties, September fourth. That should be right.

Let’s see.

The video streaming system used does not show the drop down expansion list when inside the gray area within Let me try that again. Interesting. I don’t know why that would be.

Let’s see.

So you are saying when I do R U T W, you guys can’t see this where it says fourteen, eight seventeen, eighteen, nineteen twenty, twenty one, twenty four, and you can’t see this drop down list. If you can’t see it, I’m not sure why you wouldn’t be able to if you’ve able to see everything else, but if you can’t see it, there is a list that goes, that lists every expiration date, through June of next year. And so you would select September fourth, twenty twenty six.

So we are actually running over.

What are the dates entered again? Expiration date? So it’s the September fourth is the expiration dates, and we’re selling to open the twenty nine seventy, buying to open the twenty nine sixty. And again, it should be in your inbox or on your phone because I did send the alert out to everybody.

So if you still have questions, we typically once everybody is used to this, these typically don’t last that long. We usually run about a half hour, but since we have so many new people, I wanted to go for an hour. If you still have questions, feel free to shoot me an email.

And James, if you wouldn’t mind putting up the link to the email address, it’s simple. It’s mailbagoxfordclub dot com. Just put weekly income alert in the subject line, and, you know, I will receive it.

I can’t give you personal advice, so do remember that, but I’m happy to try to explain something if you’re still not clear. Also, know, again, read the welcome materials. When you get the recording in a couple of hours, definitely go back and and look at that to go back through the trade again to see if you’re missing something. But I’m always happy to answer questions, if you shoot us an email. So, yeah, James, thank you very much for putting that link up there.

Have a great week, everybody. I will let you know if we need to change the trade. If you don’t hear from me at all today, that means we are officially filled at one dollar sixty. If, if I need to change it, you’ll get an alert within a few hours.

I’ll I’ll certainly be on top of it. So thank you all for being here. Thank you for, being subscribers, and, I can’t wait for, especially the new people, to just get rolling with this and see those credits coming in every week. And, you know, we had so many people tell us how much money they’re making, at the beginning of this session.

I’m looking forward to you guys in a few months to be chiming in with similar chats and testimonials. So thanks everyone for being here, and I will talk to you guys next week.