SPY Options Income Strategy — Step-by-Step Guide & Transcript

[00:01] I just made over $2,500 in a one-day trade on spy I opened up an spy position by selling an option and this is going to be basically option and this is going to be basically a zero DTE trade or essentially a

[00:13] 24-hour trade that I want to go over and teach you how you can do this yourself because trading SPY is truly all that you need yes trading other stocks can be exciting and there's lots of volatility in the market but truly you can make

[00:26] $5,000 $110,000 a week by just trading SPY and this position right here kind of proves it $2,520 position that I opened up 1 hour $2,520 position that I opened up 1 hour ago expiring on April 1st and today is

[00:40] March 31st so let's go over this trade on spy how you can open up this trade yourself as well as how a small account can open up a put position or a sellp put position on spy also now the reason why I like spy is it has built-in

[00:56] diversification so spy is the S&P 500 has 5 100 different companies inside of it and those companies compromise into technology Healthcare communication Services consumer defense Financial Services Industrials energy and so on so

[01:10] this is built in diversification you don't have to have 10 20 30 stocks in your portfolio you can just trade spy and focus on one ETF because this ETF the stocks it has within it is Apple Microsoft Nvidia Amazon meta Tesla so it

[01:27] has all the stocks that we're trading anyways so let's talk about the zero DTE mechanics and why you would open up a zero DTE trade as you guys know right now it's a very choppy market so if there's more volatility in the Market

[01:39] opening up positions that expire 30 days 2 months 3 months or even one week out can be risky since there's just a whole lot of volatility and specifically let's of the events that I'm looking at is April 2nd tariffs so if that's good or

[01:53] bad either way it's going to impact the market a lot and let's say that I don't want to go through uh April second I want to wait and see what happens well you can use a Zer DTE option or daily expiration and that's what Spy has which

[02:07] is amazing it's amazing that spy has daily expirations because you don't really have to even hold overnight you can open up a trade in the morning and it can expire on the same exact date so you don't have to go overnight into a

[02:20] position now this position that I opened up specifically does expire um on the next day but still it's going to expire on April 1st and it's not going to I'm going to show you how to sell a put

[02:33] how to create a small account trade on but first I want to talk about timing this trade and the most interesting thing is when the Market opens up it's unlikely to fall 1% after 10:00 a.m.

[02:48] okay listen to that one more time after 10:00 a.m. if the market is up a percent it's unlikely to end the day at Flats if it's down 1% it's unlikely to end the it's down 1% it's unlikely to end the day at -2% if it's down 2% it's unlikely

[03:01] to end at -3% at 10:00 a.m. is the most important inflection point because the option Market or just in the General stock market as a whole is the most you get a really good sense of where the market direction is after that point so

[03:14] once 10 a.m. hits you can just sell a put option that is about 1% out of the like so I'm going to show you an example let's go to trade s Spy options I'm going to show you two different examples right now so I'm going to sell a put

[03:28] option for April 1st this is exactly what I did and I went for an outof the- money option so I went for the 552 strike price and this has a 20 Delta expiration now this option expires in one day I opened it up at the end of the

[03:42] market so on East Coast time it was around 3:30 so it's the last 30 minutes of the market I opened up this trade and essentially the reason I did that was happen the entire day and now this option expires the next day so it's a

[03:55] 24-hour period so it wouldn't necessarily be technically a zero d te trade but it's essentially a z DTE trade that just expires the next day so it's kind of like a 1dt sl0 DTE the benefit

[04:08] which is good that means the entire within 24 hours so I personally collected $2,500 So within 24 hours I'm going to make $2,500 very attractive very interesting trade and again spy

[04:24] already has built-in diversification now what you can also do here let's say that you have a small account okay for a big account it's pretty easy right you sell a put option you go for a lower Delta 20 Delta and either go for the same day you

[04:36] can open up this position in the morning based on what I told you earlier In that clip that I used from a little bit of time ago but it was extremely relevant or you can go for a next day trade so you can go for you know 24 hours or

[04:48] that you don't have all this Capital to put up into an spy position you don't have you know the $50,000 you're not trading with you know a big portfolio in that case what you can do you can aim for a smaller account trade and it can

[05:02] be really really small so you can turn this trade into just you know really 500 do that so essentially you can still do the same trade as me like let's say that you want to go for a one day expiration what you can do is you can essentially

[05:15] sell a put option now I would go a little bit lower than the current price here because the position I'm going to be showing you is going to be a spread and a spread really is amazing it has a lot of income that you can collect but

[05:27] the lower down that you go for a put credit spread specifically the safer it is right it's more out of the money the more out of the money it is the less and going into the money is a bad thing when you're selling a put credit spread

[05:41] want the stock or the ETF in this example to stay above the strike price so instead of the 552 I'm going to go a little bit lower to 550 now the 550 difference it's only two it actually is a big difference in the Delta instead of

[05:56] a big difference in the Delta instead of being 20 is only you know 14 .7 so it's like less than a 15 Delta which actually makes a difference in the grand scheme of things like little bits of money make a big difference right we all know that

[06:08] that compounds and reducing risk is also very important because having less risk less chance of losing money and less chance of this going into the money against you so I would go a little bit lower so I'm going to open up the 550

[06:22] going to go a bit lower and now I'm going to buy a put option so again I'm selling a put option that's going to be more expensive and then I'm going to buy a put option that's going to go down to 5.45 you'll notice right here that if I

[06:36] buy this option the Delta here doesn't matter that much it's very low Delta so you can see like the chances of spy going this low was like pretty low it's 6% okay but the reason why I'm buying this option is because when you sell a

[06:48] 550 and then you buy 545 this creates a put credit spread so you'll see right credit spread and essentially I'm only putting up $500 worth of capital but because I'm collecting you know4 or $43 here estimated I'm really only putting

[07:04] $457 worth of capital and if you do the math $43 divided 457 is like literally a math $43 divided 457 is like literally a 99.5% return it's almost a 10% return in

[07:16] 99.5% return it's almost a 10% return in one day so you can make 10% daily now again my thumbnail says 100% obviously like this can be 100% now obviously nothing is really 100% but this has a very very high chance of profit

[07:33] especially if you follow the rule that I went over especially when the market is oversold especially when you do a zero DTE trade the the trade that expires the fallen and you bet on it not falling further you can get really really high

[07:48] probabilities 100% might not be possible just like nothing's guaranteed in life but you can get a really high percent and I mean like 90% plus and obviously some weeks and months can even be in 100% area I want to talk about risk

[08:02] management real quick because one big loss can wipe out a lot of gains and I loss can wipe out a lot of gains and I mean a lot like I've collected $2,000 a day like 30 days in a row before and it would be like 60 Grand but then I would

[08:14] have like one big loss and that big loss would be like negative3 or $40,000 still a profitable strategy but I just want you to be aware that it can be more difficult to manage a losing position here what I typically do is if spy goes

[08:28] here what I typically do is if spy goes to my break even price I am thinking about closing out that trade I'll give it some time but obviously it can be very crucial because time is already very low so if it goes into the money

[08:40] it's usually going into the money very fast and typically it's because the market is crashing for some like weird reason so it's typically like a Black manage so what you want to do is just close the position once it goes into the

[08:53] money of course it varies and I plan to make more daily trades in my Discord Community I'm planning to do this right now because the market is very choppy and generate income if you want more strategies like this if you want to

[09:05] learn about my dog strategy if you want to learn about rolling options managing first link in description for my Discord Community I encourage you to check out my description for my Discord Community I hope you choose to use this strategy

[09:18] passively for yourself I have another spy strategy video which you can watch spy strategy video which you can watch right here