Put Credit Spreads will Make You a Millionaire
It is no secret that my favorite options trade is the put credit spread. It will make you a millionaire when you trade them right. How do I know? It was the single best method of trading that repaired my account and now allows me to own, manage, and trade my own portfolio worth more than $1.2M.
LETS GET INTO IT
Fed Rates for 2024
Hope this finds you well. Here’s a quick dive into the recent Federal Reserve moves.
Yesterday, the Fed, led by the FOMC, kept the benchmark interest rate steady at 5.25% to 5.50%, aligning with expectations.
The intrigue lies in FOMC hints: They’re mulling three 25-basis-point rate cuts next year and projected four more in 2025, possibly reaching 2.00% to 2.25%. Dow Jones responded, hitting 37,000 for the first time.
In the fed futures market, whispers of a faster rate cut pace, potentially 1.5% by next year’s end. FOMC signals reluctance for near-future rate hikes.
Powell guides a ‘soft landing,’ slowing growth to curb inflation without recession. GDP set to expand around 2.5% this year.
Powell’s curveball: Suggests 2024 rate cut not tied to recession but a return to economic normalcy.
Gas Prices Declining
Quick update on fuel prices: the national average for regular gas hit $3.14 on Monday, marking a 12-month low.
This drop is linked to a significant fall in crude oil prices. West Texas Intermediate crude slid from over $90 to below $70, and Brent crude lost about 10% of its value in the past month.
AAA’s Andrew Gross points out a historical trend: crude oil often drops nearly 30% from late September to early winter, with gasoline prices following suit. Currently, over half of U.S. fuel locations have gas below $3 per gallon. There’s a possibility that the national average might hit that mark by the year-end. Take a look at the latest stats:
PUT CREDIT SPREADS
Options trading offers diverse strategies, and the Put Credit Spread is a standout, combining earnings, risk control, and hedging. This is one of our favorite strategies at CFU.
Rationale: Profitably Bullish
The Put Credit Spread involves selling a put and buying a lower-strike put simultaneously. It capitalizes on a moderately bullish to neutral market, aiming to earn premium income while banking on the stock staying above a set level. The price of the underlying asset only needs to end above the top strike for full profit.
Fully Hedged: Safety in Volatility
Unlike naked puts, this strategy fully hedges by buying a lower-strike put, capping losses and providing a clear maximum loss. It’s a risk management tactic, especially valuable in unpredictable markets.
BONUS: The Put Credit Spread is very similar to a stock collar. It’s a smart way to emulate collar strategies without the burden of stock ownership. Collars are extremely popular with hedge funds and the put credit spread offers 90-95% of the similarities for less initial capital outlay.
Example: $PYPL
(THIS IS A CFU TRADE EXAMPLE!)
Profit Profile
This above graphic shows the profit and risks associated with this trade.
- This shows the underlying probable outcomes. We structured this trade so the odds of probability (the green area) is well behind the 50% of the bell curve
- The area of profit
- The area of loss
CFU Trading Results From Last Week
Our fully hedged trading strategy works and is producing results. These are the trades we close out last week and the returns we produced for our members:
$ABBV: 10%
$AVGO: 120%
$CVS: 24%
$CVS: 24%
$GPN: 29%
$GOOGL: 92%
$ICE: 32%
$OMC: 36%
$ORCL: 58%
$PODD: 8%
$PYPL: 78%
$RH: 68%
$SOXL: 91%
$SPY: 85%
$TNA: 59%
$TSLA: 16%
$TSLA: 50%
$TSLA: 51%
$TSLA: 84%
$TSLA: 91%
$TSLA: 97%
CLOSED AND REALIZED PROFITS 💰
If you haven’t joined CFU yet, what is stopping you?
Here, I’ll throw you a deal, 25% off your first month so you can ease in, see the quality of our service and the results we will produce for you within 4-6 weeks.
PROMO: CFUINSIDER25
Look forward to seeing you inside,
Stephen
Founder, CFU
