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Chubbly, My original post was just a target of 3%-5% return trading some spreads. Everyone knows the market averages 7% buy and hold over extended periods of time. We are discussing ways to make even more than that. Some people trade multiple systems to make significantly more money than 7%...

Good Point JackRab. That makes sense about the 1700, instead of 1690. I guess the trade is really a protective trade if an atomic bomb goes off, and the Market drops to 1300 quickly (unlikely)...but if it did, I would be wiped out if trading unhedged.

So overall, is this strategy not worth it? Whats your opinion? Am I a lunatic? I figure if I can make 3% 6 years in a row, and then MAYBE have a 10% loss year 6... this is worth trading. Also, keep in mind this is not my primary way of making money, this is just a supplement.

Sig, Thanks for the evaluation. That's pretty much my conclusion too. So lets say you are trading 10 spreads, on a 100k account. Looks like you can make $70 bucks/month/spread roughly. $8,400/year on a 100k account = 8% Now during one of those years that might happen 1 out of every 7...

Thanks FSU. Thanks for defining the types of positions I have been placing: Short Vertical PUT Time Spread So, what is my risk then? in this position? Sell 1700 SPX Puts (60 days out) Buy 1690 SPX Puts (46 days If tomorrow the Market dropped to 1200, I would be down 1k per spread minus...

Thanks for the reply J_S. This is a hedged short put. I'm pretty sure my max risk is about $850 bucks per spread. I would also argue this is a pretty boring strategy, and I don't max my margin on this as it is not worth it. Just curious what the options experts think of this, and what flaws...

Yes, pretty simple math. If you have a 100k account, and trade roughly 5 of these spreads per month, you make 5% return. Once every 5 years, when the market corrects so hard, that the market gets close to your strike you lose 1 years worth of profit on the system. That's the way I look at it...

My goal is to make about 5% a year trading the below system, and it works generally well. What are the pro's and con's of this type of credit spread, and what the hell is it even known as? I don't even know what to call it as I leg into it sometimes. Sell 1700 SPX Puts (60 days out) Buy...