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2021 SPX put credit spreads trading review – week 50

After a year or two of testing and studying how to trade SPX efficiently and without losing money. I tested several strategies and although there were some losing trades, overall, the strategy I decided to trade with live money worked well.

The strategy is to sell put credit spreads (PCS) to generate income in lieu of Iron Condors. The reason was that it was usually the call spreads that got me busted. Many times, the index rallied relentlessly up, and to roll the spread higher I had to use put spreads to offset the cost. Thus I got closer to the money on the put side, the market sharply reversed, and the losses wiped out my account.

I also added indicators to help me to stay out of the market when there is a significant weakness and increased danger of the market going down. When the signal says to stay away, I do not open a trade. The test showed that by doing so I would avoid most selloffs in the market and be on the sidelines. And lastly, I added an SPX hedge trade that should protect my trades and my account against black swan events when the market crashes hard as it did in 2008 or 2020.

 

Initial trade set ups

 

For this strategy, I dedicated a $3,600 initial amount that will be used to trade SPX PCS strategy per week. If this amount is depleted, I will evaluate the strategy if to continue or change it. If I grow this amount, I will scale up the trading.
 

WHAT WILL WE TRADE?    
DAY DTE TYPE
MONDAY 7 DTE Put Credit Spread
TUESDAY 30 DTE Put Credit Spread
WEDNESDAY 7 DTE Put Credit Spread
FRIDAY 60 DTE Put Credit Spread
EVERY MONTH 120 DTE Put Debit Spread – HEDGE

 

Last week trading

 

DAY SIGNAL TRADE STATUS
MONDAY Signal positive Trade closed – LOSS
TUESDAY Signal negative No trade opened
WEDNESDAY Signal positive Trade closed – LOSS
FRIDAY Signal positive Trade OPEN
EVERY MONTH Signal positive December 21 trade OPEN

 

On Monday, our entry signal turned positive and we opened a new trade as per the rules. But on Tuesday, the market turned negative. In order to protect our investments, we closed Monday’s trade for a small loss.

On Tuesday, the signal was still negative so we skipped Tuesday’s trade.

On Wednesday, the market turned positive again which allowed us to open a new trade again. Unfortunately, on Thursday, the market sold off again so we got out for a small loss.

On Friday, the signal for 120 DTE trade was positive (it was negative for 7 DTE trades if we would take any on Fridays), so we opened our 120 DTE trade.
 

Overall, the strategy resulted in a $145 loss last week.
 

Initial account value: $3,600.00 (Account inception: 12/07/2021)
Last week beginning value: $3,600.00
Last week ending value: $3,455.00

 

SPX PCS account value
SPX PCS account value
 

SPX PCS account vs SPX
SPX PCS account vs SPX index
 

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One response to “2021 SPX put credit spreads trading review – week 50”

  1. Peter says:

    Looking to learn from SPX credit spreads

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