This is an options trading strategy that allows you to make steady, risk-free profits by trading SPY (the S&P 500 ETF) options on a weekly basis. I recommend using Robinhood to execute the trades because of their low commissions and fees.
The strategy only requires an initial investment of $1,000 to get started. It allows you to make at least $200 per month in guaranteed profits. While that may not seem like a lot, think of it as steady passive income that really adds up over time.
When to Place the Trades
Only place trades using this strategy during weeks when the CPI report is not being released. CPI reports come out once per month, so there are typically 12 weeks per year that you need to avoid. That leaves 40 weeks when it is safe to make trades.
Here is the profit scenario for trading 40 weeks out of the year with an initial $1,000 investment:
- Every trade nets at least $50 profit
- $50 profit x 40 trades per year = $2,000 annual profit
- All while only putting $1,000 of capital at risk!
If you start with $10,000 capital instead of $1,000, you could make $20,000 per year in risk-free profits.
How the Trading Strategy Works
Opening the Trades
On Monday morning, take note of the SPY opening price for the week. You can easily find this online.
Also look up the Average True Range (ATR) indicator reading for SPY on a weekly timeframe. I recommend getting this custom indicator for free on TradingView.
Then determine the call strike price by taking the SPY opening price and adding the weekly ATR. Round to the nearest whole number.
The put strike price is calculated by subtracting the weekly ATR from the opening price.
Entering the Credit Spreads
Next, open two separate credit spreads on SPY options:
- Sell a call at the call strike and buy a further out-of-the money call to define risk
- Sell a put at the put strike and buy a further out-of-the-money put to define risk
Aim for a $0.07 credit on each spread. Since we are starting with $1,000 capital, we can afford 10 contracts per spread.
It’s unlikely both spreads will fill at a $0.07 credit simultaneously. That’s okay. Focus on getting one spread filled at $0.07 first. Then adjust the limit price on the other spread down to $0.03 in order to get it filled.
Once both are filled, you have created an iron condor with a total credit of $0.10 per contract.
Closing Out the Trades
Immediately enter closing trades by buying back the spreads at a limit price of $0.01. Use “good till close” orders so you don’t have to monitor the positions each day.
That’s the whole trading strategy! Use it to collect easy, low risk income week after week.
Let me know if you have any other questions!
I am not a financial advisor. Trade at your own risk. This is just my personal success strategy.