The Winning Secret: Credit Spreads

How this Strategy Works

The Winning Secret

The Winning Secret takes advantage of time decay and the natural fluctuations of the underlying stock or index by selling short term–10 to 17 days– out of the money credit spreads.

A credit spread is where you sell an out of the money option–either a call on bearish trades, or a put on bullish trades. And then you buy another option a little further out of the money to hedge.

With a hedge you can only lose the difference between the strikes minus your credit–in other words a relatively small amount of money compared to selling naked (just selling the call or put without a hedge).

Since the closer option has more value than the further option it creates an instant credit in your account. Unlike most any other trading strategy, with this method you get paid the moment you put on the trade.

Of course the devil is in the details, so we add ways to reduce your risk even further by setting stops and setting automatic orders to buy back once the majority of our credit is realized regardless of how much time is left until expiration.
 
These little tweaks to an already high-probability strategy increase your odds of winning to between 80 and 90% making this one of the best short term ‘bread and butter’ strategies anywhere for creating consistent cashflow.