If you’re new to options trading, starting with a high-probability strategy is the best way to grow your account while building confidence. In this video, we’ll introduce you to one of the simplest and most effective strategies, capable of generating over 80% returns—especially in bullish markets like 2023.
The Smart Approach to Options Trading
Why Most Beginners Struggle
Professional trader Mike Bella Fury explains that many beginners mistakenly view options as a cheap way to play large price swings. While buying calls and puts has its place, it’s not the most consistent way to generate income. Instead, selling options through spreads offers a more reliable and predictable way to make money in the market.
Seth Freudberg, a head trader at SNB Capital, reinforces this idea:
“Selling options for predictable monthly income is a proven method. Unlike speculative option buying, this approach focuses on consistency.”
In this strategy, we’ll use Put Credit Spreads—a simple and high-probability setup—perfect for beginners.
Understanding Delta in Options Trading
Before diving into the strategy, it’s important to understand Delta—a key options metric. Delta measures how much an option’s price will change relative to the underlying asset.
For this strategy, we use low-Delta put options to improve our success rate.
Example: December 2022 Market Conditions
- In December 2022, the S&P 500 (SPX) fell over 25% before rebounding.
- A 3775 put option had a Delta of 10%, meaning it had a 90% chance of expiring worthless.
- This indicates a high-probability trade—selling puts at strike prices unlikely to be reached before expiration.
The Put Credit Spread Strategy
A Put Credit Spread involves:
- Selling a higher-strike put option
- Buying a lower-strike put option simultaneously
This setup generates an upfront credit (income) while defining risk.
Example Trade: December 2022
- Sell 10 contracts of the 3775 put for $12.70 premium each.
- Buy 10 contracts of the 3770 put for $1.23 premium each.
Trade Breakdown:
- Premium collected: $12,700
- Premium paid: $1,230
- Net credit received: $400 (this goes directly into your trading account).
By expiration, SPX closed at 38.3950—above the 3775 strike price. Since both options expired worthless, the entire $400 profit was kept.
Repeating the Strategy for Consistent Profits
January 2023 Trade Example
- Sell 10 contracts of the 3535 put for $12.95 premium each.
- Buy 10 contracts of the 3530 put for $1.30 premium each.
Results:
- Net credit received: $450
- Even if the market dropped 300 points, the options expired worthless—securing another $450 profit.
By repeating this strategy monthly, profits accumulate steadily. Over 12 months, this approach yielded $4,050 in profits—an 85% return on capital.
Managing Market Downturns
While this strategy works well in bullish markets, adjustments are needed in volatile conditions.
Example: August-September 2022 Market Sell-Off
- Delta for sold puts increased to 20%, meaning a higher risk of trade failure.
- The solution? Rolling down the put strike price by:
- Buying back the original position.
- Selling a new put option at a lower strike price.
This adjustment helps reduce risk while maintaining profit potential.
Key Takeaways
✔ Put Credit Spreads using 10 Delta options offer a high probability of success.
✔ This strategy works in all market conditions, but adjustments are needed during volatility.
✔ Rolling down positions helps manage risk in bearish environments.
✔ Repeating this trade monthly can generate consistent income over time.
✔ A 10 Delta Put Credit Spread is a beginner-friendly approach to long-term trading success.
By mastering this simple but effective options strategy, you can build a profitable trading career with minimal risk.
