𝗧𝗵𝗲 𝗦𝗲𝗰𝗿𝗲𝘁 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝘆: How to Profit from the S&P 500's Ranges!

I'm excited to share a simple yet powerful strategy to enhance your portfolio's returns. 

In my latest video, I break down the ins and outs of trading calendar spreads, particularly using the S&P 500 ETF (SPY).

This strategy is perfect for those looking to capitalize on the market's natural tendencies without needing to predict major moves.

Why Calendar Spreads?

Calendar spreads are an effective options strategy, especially when the market is in a ranging mode. The SPY, for example, spends a significant amount of time (50-60%) in a range, making it ideal for this approach.

How It Works:

1. Establishing the Spread:

   • Sell a shorter-term call (e.g., 28-day call expiring on April 31st).

   • Buy a longer-term call (e.g., 58-day call expiring on August 30th).

   • This setup creates a debit spread, meaning an upfront cost to establish the trade.

2. Benefits of Low Implied Volatility (IV):

   • Currently, the IV percentile of the S&P 500 is low (6%).

   • As time passes, the profit zone of the calendar spread expands.

   • If IV increases, the profit zone grows even larger, enhancing the trade's potential.

3. Risk Management:

   • Set a stop loss at 50% of the premium.

   • Aim for a profit target of 50% of the premium.

   • This strategy has a 70% win rate, making it a net gain over time.

Why This Strategy Works?

The key to the calendar spread's success lies in leveraging time decay and low IV. As time passes, the profit potential increases, and any uptick in volatility further boosts your chances of profit.

Ready to boost your trading game to the next level?

Watch my latest video and see this strategy in action! Got questions or thoughts? Drop a comment below—I love hearing from you!

Don’t forget to click the link in my bio for free resources that will help you become a better investor and trader!