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2022 SPX put credit spreads trading review – week 35

The sell-off continued last week and that affected performance of our SPX strategy. I did a few trades last week – adjusting one trade by rolling it away using a “box” trade. Then I opened a new credit call spread with an expiration last Friday. The spread expired worthless for a full profit. I also had a trade that I was trying to fix which was also set to expire last Friday. But with a sudden, sharp market selloff, the trade became an immediate bust and not worth repairing it. And since we collected plenty of cash premiums I decided to let that trade go and let it expire for a loss. The calls expired for a full profit, the puts were a bust. Yet, the overall account remains positive for this week.
 

The SPX trading delivered a $305.00 gain. That brought our account up by 0.98% while SPX lost -3.29%.
 

Overall, our SPX account is up +776.86% since the beginning of this program, and we have $38,474 in unrealized gains.

 

Initial trade set ups

 

For the SPX 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 to determine whether 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 & 40 delta 10 wide Put Credit Spread
TUESDAY 30 DTE & 40 delta 10 wide Put Credit Spread
WEDNESDAY 7 DTE & 40 delta 10 wide Put Credit Spread
FRIDAY 60 DTE & 14 delta 10 wide Put Credit Spread
EVERY MONTH 120 DTE Put Debit Spread – HEDGE

 

Our SPX strategy is designed as directional options trading. We are selling credit put spreads to collect premiums, and hopefully, these spreads expire worthlessly, or we repurchase them for a small debit.

We use a set of indicators (primarily based on moving averages and volume profiles) and market sentiment that generates bullish signals. The trading is based on a “trend following strategy.” We open the trade if we have a bullish signal and a bullish trend. If we do not have a signal, we stay away.

We set the set of rules and alerts and backtested them. The backtesting software proved that the strategy was viable and returned good gains. We also tried to automate the decision-making as much as possible to have the trading as mechanical as possible. This helps eliminate our emotions. The decision-making was reduced to: “bullish signal present” – open a trade, “not present” – stay away. It worked well.

Here you can see all our trades:

 
SPX PCS account value
Click on the picture above to see the entire list.
 

We do not trade 0 DTE trades. This strategy is designed to be as passive as possible. You open a trade and let it run. You do not need to be glued to the computer all the time. The strategy takes advantage of the market’s historical behavior of mainly going up. Yes, there will be selloffs and corrections, even bear markets, but over time, it goes up. And therefore, our strategy is designed for this direction. The premise is that if we have a bullish trend, we open a bullish spread and let it run. 80% or 90% of the time, it will be a winning trade. And if the trend is strong, we open more aggressive trades (which is not the case today due to the market’s correction).

How much money can you trade?

As you can see in the table below, the highest amount of cash to trade this strategy is $19,995.00. That will allow adjustments, rolls, and comfortable trading without blowing your account. Can you trade less? Well, yes, I started with a $3,600 initial amount. But you need to be selective. You won’t trade all trades. You just trade the safest trades only (which is the Friday trade), especially in this market, and when the market gets out of this mess, you can start adding trades. And you do not compound. You must wait for the actual trade to end before opening a new trade. This way, the growth will be a lot slower, and you collect less credit, but you do not blow your account, mainly when you need to roll. You do not have money to do that (as the old busted trade will need more buying power which can be reduced by adding an offsetting trade that neutralizes the old trade, but you still will need that initial buying power).

 

Last week trading

 

Overall, the strategy resulted in a +776.86% gain last week.
 

Initial account value (since inception: 12/07/2021): $3,600.00
Last week beginning value: $31,261.95
Last week ending value: $31,566.95 (+0.98%; total: +776.86%)
The highest capital requirements to trade this strategy: $19,995
Current capital at risk: -$5,474
Unrealized Gain: $38,474 (-702.85%)
Realized Gain: -$8,143 (148.76%)
Total Gain: $30,331 (-554.09%)
Win Ratio: 55%
Average Winner: $322
Average Loser: $490

 

SPX PCS account value
SPX PCS account value
 

SPX PCS account vs SPX
SPX PCS account vs SPX index net liq
 

SPX PCS account vs SPX
SPX PCS account vs SPX index
 

If you want to receive trade alerts whenever we open a new SPX put credit spread or a hedge trade, you can subscribe to our service:

 

SUBSCRIBE HERE

 

Note, if you wish to subscribe to multiple levels, you can do so by subscribing to one level only and then sending us an email that you want to be added to other levels too.

Also, if you like this report, hit the like button so I know there is enough audience wanting to see this type of report. If you have any questions or want to see anything else about my SPX trading, do not hesitate to contact me or write a comment in the comments section. Thank you!

 
 





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