Inside a CFU Trade: A Comprehensive Guide on How We Score, Enter, and Exit Spreads
Options trading isn’t just about luck or bold guesses—it’s about building a repeatable system based on risk-managed decisions and market probabilities. At CFU (Cash Flow University), we’ve developed a trade methodology grounded in consistent credit spread execution. Whether you’re new to spreads or looking to refine your approach, this inside look will walk you through how we identify, score, enter, and exit spreads with the discipline and structure our community has come to rely on.
This isn’t theoretical. These are real principles applied daily in our live trade alerts, dashboard evaluations, and coding automation—all designed to give traders an edge in a competitive market.
What Is a CFU Trade?
At its core, a CFU trade is a rules-based credit spread. We primarily trade vertical spreads—put credit spreads (PCS) and call credit spreads (CCS)—that allow us to define risk, collect premium, and position for directional or neutral market outcomes. Each spread involves selling an option and simultaneously buying another option at a different strike to hedge risk.
We are not chasing volatility spikes or relying on gut feelings. Every spread is backed by data and scored through a rigorous framework that blends market structure, volatility, and probability metrics.
The CFU Scoring Engine: Where Trade Selection Begins
One of the most powerful tools we’ve developed is our internal scoring system, which evaluates each trade on multiple dimensions. This system is built from a Python-based rules engine that simulates our manual evaluation process—scanning option chains, evaluating technical setups, and filtering for risk-reward compliance.
Here are the high-level components we consider when scoring:
- Technical alignment: Does the chart support our trade bias? This includes trends, resistance/support levels, and momentum strength.
- Implied volatility: Is IV elevated relative to historical ranges? We prefer to sell spreads when IV is higher, improving our edge.
- Delta and probability of profit (POP): Is the short strike sitting in our target delta range (typically between 0.20 and 0.45)? We want high POP while still capturing decent premium.
- Market context: What are the macro conditions, earnings windows, or Fed activity impacting our thesis?
- Spread width and net credit: Does the premium collected meet our minimum thresholds relative to risk? We typically want 25–30% ROI on margin.
- Greek balance: Our trade scanner weighs net delta, theta, and vega to ensure triangle balance across live positions.
Each trade gets an internal score between 0 and 100. Only spreads above our cutoff are considered for entry.
Entering the Trade: Structure and Timing
CFU trades aren’t just about the “what,” they’re about the “when.” Once a trade scores high enough, we move to the execution phase, which includes:
- Pricing precision: We only enter at the mid-price (or better) based on real-time option chain data. Slippage kills returns.
- Time of day: We often avoid trading within the first 30 minutes of market open due to volatility. Late morning or early afternoon tends to be the sweet spot.
- Market posture: We analyze SPY, QQQ, and other indices to avoid entering trades in whipsaw conditions.
- Entry cadence: Our system spaces out entries weekly to ensure staggered expiries. This helps maintain rolling theta and gives members flexibility to manage trades individually.
All trades are announced via Slack in mobile-optimized alerts showing role (Anchor, Hedge, or Decay), structure, delta, Greeks, and profit target.
Spread Types: Why Credit Over Debit?
While we occasionally use debit spreads for hedges, CFU focuses on credit spreads due to their statistical edge. The time decay (theta) works in our favor. Even if the underlying moves sideways or slightly against us, the spread may still decay to profit.
That’s why most of our trades are:
- Put Credit Spreads (PCS): Bullish-neutral trades betting that price stays above a short strike.
- Call Credit Spreads (CCS): Bearish-neutral trades betting that price stays below a short strike.
We structure each to collect enough premium to justify the risk, while using tight deltas and high POP to avoid “lottery ticket” trades.
Managing Risk Like a Pro
What sets CFU apart is the intensity of our risk management. Every trade is part of a bigger triangle structure, balancing out directional bias and time decay.
Some key rules we follow:
- Max open positions: Never more than six concurrent spreads.
- Triangle role assignment: Each spread must fill a role (Anchor, Hedge, Decay) to balance net Greeks.
- Capital limits: Each trade respects our max risk per spread and total margin exposure.
- Live dashboard tracking: Each trade is recorded, P&L tracked, Greeks monitored daily. This is not “set and forget.”
Our Python backend includes logic for auto-detecting roll candidates, repairing underperforming trades, and rotating out of spreads that fail to meet ongoing POP thresholds.
Exiting the Trade: It’s All About Math
You can have the best entry, but poor exits destroy performance. CFU exits are pre-planned and systematic.
- Profit exits: Most trades are closed at 80–90% of max profit, depending on width and time remaining.
- Early exit triggers: If price breaches technical levels or the short leg delta exceeds thresholds, we alert members to consider closing early.
- Rolls: For trades with time value remaining but poor outlook, we’ll roll the spread to a future expiry, sometimes widening the structure to maintain POP and credit.
- Expiration rules: We rarely hold through expiration unless the trade is extremely deep OTM and risk-free to let expire worthless.
Profit-taking is never based on greed—it’s based on system metrics and risk-to-reward optimization.
The Psychology of Execution
An underrated part of successful spread trading is mindset. At CFU, we focus heavily on trade psychology: sticking to plan, accepting small losses, resisting FOMO, and trusting the math.
We teach members to:
- Detach emotionally from each trade.
- Evaluate based on portfolio performance, not trade-by-trade wins.
- Stay mechanical—your job is to execute, not predict.
- Focus on consistency, not homeruns.
CFU doesn’t reward cowboy trading. Our community is built on discipline and accountability, not speculation.
Automation and the Future
Many of our CFU pro traders use our Python-coded tools to automate parts of their workflow. From scanning spreads using rule-based delta and theta filters, to assigning triangle roles automatically, we’ve eliminated most of the grunt work so traders can focus on what matters: decision quality.
These tools are constantly evolving. As our data grows, we refine the scoring engine, the POP models, and the Greek balancing scripts.
CFU isn’t just a place to learn—it’s a place to grow with tools, feedback, and systems that scale.
Final Thoughts: It’s About Repeatability
What makes CFU work isn’t magic—it’s process. Every trade goes through a rigorous selection, entry, management, and exit protocol that’s been battle-tested in thousands of trades. We’ve made mistakes, optimized along the way, and built a community where data and discipline come first.
If you’re tired of guessing, hoping, or trading on emotion, maybe it’s time to join a team that treats trading like a business, not a bet.
Ready to Level Up Your Trading?
Join CFU today and get your first 30 days free. Visit www.joincfu.com to get started.
