This is a main campaign style trade. It doesn’t matter what the market is doing, this goes on every single 120 DTE cycle.

This 120 DTE version has been backtested with over a 90% win rate, even through the 2020 Covid Black Swan Event (BSE) where the market sold off significantly. Further testing could be done with further DTEs for possibly better margin requirements and win rate. See the XL112 trade for an additional variation.

Trade Mechanics

• 2 trades per month at 120 DTE
• Ladder up to 8 trades
  • Since we close the NPs at 95% profit (around 90 DIT), we usually only have around 6 trades on at a time

Trade Entry

• Enter trade every 120 DTE cycle
• Buy a 50 wide Put Debit Spread (PDS) starting at around 22-25 Delta on the Long Put
• Sell two 5 Delta NPs
• Target credit around $21-27

Trade Management

We manage the PDS and NPs as two separate trades.

Naked Puts Management

• Take profit at 95%
• Set Stop Loss at 3X the initial credit received. (This is a 2X Max Loss or 200% Loss)
• Stop out at 2% of Net Liq — whichever happens first
• Optionally, roll NPs out and down if tested and a good credit can be achieved

Put Debit Spread (PDS) Management

• Close In The Money (ITM) legs by expiration to avoid being exercised or assigned
• Wait until close to expiration to close at or near full profit