Are you ready to learn an incredibly simple strategy to potentially make $100 per day through options trading? Well, you’re in luck! In this article, we will delve into the world of credit spreads trading and break down a straightforward four-step process to help you achieve that goal. Whether you’re new to options trading or looking to enhance your current strategies, we’ve got you covered. Let’s get started!

Understanding Credit Spreads Trading

Before we dive into the steps, let’s ensure we’re on the same page regarding credit spreads trading. Credit spreads are a type of options strategy that involves two legs: a short option (usually a call or put) and a long option (of the same type) with different strike prices. The goal is to generate a net credit when opening the position, and your profit potential is limited to this credit.

Now, let’s explore the four simple steps that can potentially help you make $100 per day using credit spreads.

The Four Step Credit Spreads Trading Strategy

Step 1: Pick a Direction

The first step in this strategy is to determine the direction of the underlying asset’s trend. You’ll need an indicator for this, and we’ve got a free one to offer you. When the market is above a green line on the indicator, it’s in an uptrend. When it’s below a red line, it’s in a downtrend. If it’s in a gray area, the market is considered neutral or sideways.

• Optimization Tip: To maximize your potential, use the indicator provided in the article’s description to identify the market trend easily.

Step 2: Choose the Right Credit Spread

The type of credit spread you choose depends on the market’s direction:

• Uptrend: If the market is in an uptrend, opt for put credit spreads. These profit as long as the underlying asset stays above a certain level.
• Downtrend: In a downtrend, go for call credit spreads, which profit if the underlying asset stays below a specific level.
• Neutral Market: If the market is in a sideways or neutral phase, you’ll use a different approach. Go for credit spreads that are further out of the money (3-4% out of the money) with a longer expiration date (around 16 days).

Step 3: Enter the Trade

Now that you know the market trend and the type of credit spread to use, it’s time to place the trade. Use your preferred trading platform or broker to execute the order based on the setup provided by your chosen indicator. Be sure to stick to your selected strategy consistently.

• Optimization Tip: Negotiate commissions with your broker to minimize costs, enhancing your profit potential.

Step 4: Make $100 a Day

Your goal is to make $100 a day with this strategy. If you’re collecting $15 for each spread you put on, you’ll need approximately seven spreads to reach your daily target. With an estimated 85% win rate, your risk is also managed by setting a stop loss at around $0.50 per spread. This approach ensures you maintain a favorable risk-to-reward ratio.

Executing the Credit Spreads Trading Strategy

Now, let’s walk through how to execute this strategy using the example of SPY options with the Robinhood platform:

1. Navigate to the SPY options on your trading platform.
2. Access the options builder.
3. Select the appropriate credit spread type (put or call) based on the market trend.
4. Choose the expiration date, typically around 14 days out.
5. Enter the specific strike prices and check the cost per spread.
6. To reach your daily goal, put on the required number of spreads (approximately seven in this example).

Conclusion

In conclusion, making $100 per day through credit spreads trading can be both simple and achievable. By following the four steps outlined in this article and utilizing the provided indicator, you’ll have a structured approach to navigate different market conditions. Remember that trading always involves risks, and it’s crucial to manage those risks appropriately by setting stop losses and using proper position sizing.

If you want to have a 75%+ win rate while risking $20 to make $20 using credit spreads, check out the Inner Circle Program (only open for limited time)!

Thanks for reading 🙂
Austin Bouley
CEO & Chief Strategy Officer