I'm playing around with SPY also, but it just doesn't seem to work. Tom has previously talked about the advantages of ES. I"ll have to get my future accounts set up for this.

My returns are far above those numbers and over 80% in 2022.

120 DTE🍺🍺

Yes you can! But MES would be the better choice.

Yes, I run strategy no matter what the IVR. I apy no attention to IVR on mechanical trades. 2. It is a naked put and is not cash secured. It is subject to span margin. 3. The unused 50% is there for safety in a SPAN margin increase. I do not write covered calls since I do not own any stocks.

I have not tested that. I am not a huge fan of ratio spreads except as a hedge. But that is just me. I seem to land in the "Valley of Death" too often.

Just use a stop loss

Cut loss and move on, before the exchange and/or your broker increase your margin requirement by 10x and auto-liquidate your legs, or even leave you a negative net liq...

The main goal is income, Markets drift up most of the time. I do adjust the width of the PDS and also the distance of the naked puts depending on market conditions though.

Sometimes in a very bullish run with a week or two of opening them. Yes, the 1122 is when I add 2 short calls on these. I manage those calls as a separate trade.

@@TommKing13 Thanks for the reply. Can you explain if it is better to put these on in a good down day or does that have any bearing on the amount of credit one would receive. Seems with the extra two shorts one would gain more premium if vol is up on a down day. Am I off base in thinking that way?.

On TT you have to leg into 112 trades. Place the PDS first and then place the naked puts in a 2nd trade.

@@TommKing13 Thank you very much ... Tom

By using only 30% of your buying power. That way you still have 70% of your buying power in the event of margin (BP) expansion during market declines.🍺🍺

One trade every other Wednesday is 2 contracts per month.🍺🍺

I use the BP Effect from my trading platform. As I am planning the trade and setting it up, I simply record the BP Effect from the platform to make sure I am staying in line. For me, 2 naked ES puts are around $6k in BP

I want to let it go longer. However, you can close the naked puts only for 90-95% winners! Then leave the PDS running as a hedge!

@@TommKing13 thanks. I'm still trying to wrap my head around getting a 5-10% return in a month! Thanks so much for sharing this strategy. It's a total game changer.

You dont need to touch on the put debit spread after your place it, you manage your trade (take profit or loss) with the naked portion of the puts, you can leave the spread part alone working as a hedge for the later downside

@@johto thank u sir🙏

He did not open this trade. He just analyzed it. Tasty requires this to be 2 transactions not all in one.🍺🍺

Absolutely. I run a 10K portfolio for members and use them as the core with MES

@TommKing13 thank you. Not sure if you saw my other question somewhere about whether you can do the weekly strangles in a low vol environment?

@@TommKing13 Thank you. Do you offer a lower monthly fee for access to the 10K portfolio? I am very interested.

Yes, we can see at around 15:00 that he would bring in 4k over 2 months (64k BP) with 60dte and 4.4k over 4 months (24k BP) with 120dte. But he looks to do 2 contracts of the 120dte (or 2 positions per month, 1 every other week) This uses 48k BP and 9k over 4 months compared to 8K over 4 months with 60dte.

I have a stop loss of 1X the max profit or I can take assignment or I can roll out and down. Plenty of options to adjust or exit. Also, since I close the naked puts at 95%, I remove a lot of risk.

Lol, I am pretty sure that Tom probably have thought of that:) . You do have a bit of protection with the debit spread (I would say about 14-17 %) but once you ladder in the number of trades in conjunction with your net liq you will see that if flash crash happens, the old trades are actually going to make more money as they will get in the bear trap. Now, the newer ones will have a few losers but with solid rules like stop loss at 3x premium received and closing out the shorts at 90% profit, you are looking at average of 36% a year. It has been backtested through 2020. It’s solid strategy and actually quite conservative. Add strangles to increase return on margin and you should be consistently looking at 50% a year. Another thing to consider, using only 30% of your buying power is crucial. Even if margin expands, with proper sizing you will still be winning consistently the end because you can sustain the volatility expansion and once it snaps back down, your positions will be in profit. Hope this helps, cheers

Great answer...saves me time to type that

Yes But it would take a 20% drop to get there.

I do not pay much attention to vol. I dont care about VIX and dont really look at IVR either.

@TommKing13 The reason I asked is that I set up to see what a trade would look like for the weekly strangle in m e s closest to 90DTE and the credit was only about 13.75

Yes pretty much. I trade the 112 in my TW Roth. You can trade MES with 5-6k min but if you want to trade ES you need 25k min balance. TD doesn’t even allow you to trade MES if you don’t have 25k in your IRA. BP for a LT112 with MES in an IRA requires around 1,400 BP. In regular account it is around 700. I did some compound interest calculations considering that the 112 should yield around 36% a year but if you do it in IRA you are probably looking at around 18%. In the long run it seems that even considering the taxes you would make much more in regular account.

Watch the video

Futures use SPAN margin. Look up how your broker implements it for whatever type of account you trade.

SPAN margin.

He is closing the losing trade at 1x of the Max profit in the trap if it goes the other way. For example, if you are getting $100 in the Tail and $300 in the trap in premium, should the trade go against you, you will close at -300$ yourself

IBKR has different margin requirements than TOS or Tastytrade.

@@Timocraat I have an IBKR portfolio margin account and just put on a 112 ES 117DTE for a $1044 credit. IBKR requires 16k initial and 13k maintenance margin to put the trade on. So 8% return. Definitely not as good as Tasty’s 8k margin requirement.

I wonder if I should apply for tasty. I've been mostly doing cash secured puts this year, and I just got approved for spreads on Schwab. I don't think I can execute the 112 strategy at all until I have more permissions.

What's the risk if he loses a trade?

He said if you had 130k ud make 18% by using 64k of buying power instead of 37.5 of using 100% of 64k buying power

15:03 I agreed with you for a minute, but you have to look at it in a different way. He’s doing this in a rolling fashion. In other words, at all times he has $24,000 of BP in use which is generating $1100 a month. Compare this to $2000 a month on $64,000 BP. He is not claiming you only need $24,000 to get $1100 a month. He is just saying it’s a better return on capital.

Tom already answered this question: "On TT you have to leg into 112 trades. Place the PDS first and then place the naked puts in a 2nd trade."