The Trade Busters 02 - SPY/SPX 7 DTE Income Strategy Deep Dive
Jul 15, 2021
The podcast discusses the SPY/SPX 7 DTE income strategy in detail, emphasizing consistent income generation. Topics covered include delta selection, credit targeting, entry criteria, stop loss, trade size, and a trader's income strategy for SPY/SPX options. It also explores the importance of consistent entry strategy and targeted returns to achieve financial goals.
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The Break Even Math Behind Two Times Stops
- The strategy seeks evergreen income through three staggered weekly naked puts, using a two-times loss against one-times potential profit.
- A 66.6% win rate breaks even, so slippage makes the targeted 75–80% win rate essential.
Why Thirty Delta Failed After Slippage
- Trading 30-delta puts produced roughly a 70% win rate but ultimately returned to breakeven after nine months.
- Slippage consumed the expected 10–13% premium capture, motivating a shift toward lower deltas.
Credit Targeting Controls Uneven Trade Risk
- Consistent credit matters more than consistent contract counts because varying premium sizes can distort results through unlucky win-loss sequences.
- The strategy targets 10–20 delta while adjusting contracts to collect a similar dollar credit.