The “Short Play Strategy” is a call credit spread strategy when the market is crashing or bearish. This strategy generated a 341% return with a 88% win rate since 2003. That’s an average yearly return of 15.78% by following this step by step strategy. So, if you want to make over 20% a year even if you work full-time or don’t know anything about put credit spreads, keep reading 🙂

Historical Performance Of Credit Spread Strategy

Let me set the scene and define some terms before getting into the strategy…

Call Credit Spreads are a strategy that makes money when the stock goes down, stays the same or goes up slightly. This is a very reliable and predictable strategy when you trade it correctly. It is typically used by traders to grow their account and generate a consistently side income.

A crashing or bearish market is when the stock is making lower highs and lower lows. If you were to look at the chart, you would be seeing it decline over time. Typically, most traders and investors lose money during this period of the market. However, with call credit spreads, we can easily make money to the downside.

Referencing the image above, you can see a few important things on this stock chart. When the stock crosses below the red line, the stock is expected to be bearish and start heading lower. When the stock is about to move lower, we follow the rules for the “Short Play Strategy” which are listed below.

The Short Play Strategy Instructions

• Wait for the stock to cross below the red line ( -1 and -3.5 standard deviations of the 200 day moving average )
• Determine your short strike price for the call credit spread ( stock close price x 104% )
• Determine your expiration date ( current date + 9 days then round up to the next Friday )
• Setup the trade in your broker (sell to open the short strike price, buy to open the strike price above the short price, and use the expiration determine above)
• Ensure you are collecting at least .15 in credit for placing the put spread
• If you can collect .15, officially place the trade

Special entry criteria to increase your win rate: it is best to only enter on green days where the price change for the day is greater than 0%.

The key lesson here: trade credit spreads in the direction of the trend!

** To make the trade more profitable, there are a few small tweaks you need to make about refining your entry and exit plan. These tweaks are only available for 10% Credit Spread Inner Circle Members **

Call Credit Spreads, on average depending on the delta you use, have a 70-80% win rate! However, you can increase that win rate to 88% when you trade the Elastic Rejection Credit Spread Strategy! If you want to learn more or have any questions, reach out via email at hello@theimpeccableinvestor.com.

Thanks for reading 🙂
Austin Bouley
CEO & Chief Strategy Officer