Review of "Make A Living Trading This ONE Option Strategy (For Beginners)"

 


Summary

This video describes how to set up put credit spreads for "perpetual" income.  Here is the setup:

  • Trade on positive drift ETFs, like SPY that have a track record of growth.  This increases the win rate in the long term.
  • Choose the short strike with a delta between 25 and 35, since these give the best risk reward.
  • Choose the long strike to be $5 to $10 lower.
  • Set up a DTE of 45, which has empirically been shown to increase the probability of options expiring worthless.
  • Close positions at 21 DTE, regardless of PnL.  (I am not sure about the justification for this, except that it's simple)
  • Repeat.

Based on TastyTrade's findings, there is up to a 47% return on capital over the year (not sure how this is computed).

Selecting Stocks

Pick a set up with an oversold condition on stochastic or RSI.

Find support in the charts

Pick a 45 DTE with a strike below the support level with a 25 to 35 delta.

Upshot

I like this video.  It is very clear, accessible, and actionable.  It presents results, including risk levels.

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