Let’s be real, most people trading options are trying to grow a small account. That’s the reason that I am doing this small account challenge. However, even if you are someone with a larger account, these tips will help you out as well. But, trading SPY credit spreads is one of the greatest ways to grow a small account!
Explaining How Credit Spreads And Options Work
There are a ton of different strategies you can use when trading options with a small account:
- Naked Options: When you buy and sell single options as you would stock. For example, buying a put options to short a stock or buying a call to go long on a stock.
- Credit Spreads: Make money from time decay and being right on direction by expiration. This requires a margin account though.
- Debit Spreads: Make money from betting no a strong directional move.
In this article, I’ll be covering the strategy that I have been using in-depth as well as the practical tips for growing your small account.
My SPY Credit Spreads Trading Strategy To Grow A Small Account:
- Strategy: Credit Spreads using the strategies based on the market trend
- Bullish and Neutral Markets: I use put credit spreads
- Bearish Markets: I use call credit spreads
- Entry Criteria: I use the rule of 15% profit potential which means I only enter a trade if I can collect 15% of the collateral required
- Position Sizing: I use the 10% account size rule which means I only put 10% of my account into each trade.
- This rule is voided if you have less than $1,000 in your account
- Exit Criteria: Let every trade go until expiration
- Early exit criteria for the trade occurs when you can buy back a credit spread for .05 or less when there is still time left in the trade
If you want to follow my SPY Credit Spreads Small Account Trading Challenge on YouTube, you can see how I implement this strategy and how I adjust it in real time. If you want to get my personal stock alerts for my small and large account, join my Inner Circle Alerts Program! It’s backed by the “Make Money Or Don’t Pay” guarantee.
Thanks for reading 🙂
Austin Bouley
CEO & Chief Strategy Officer