How I Trade Options with a 9–5 Job: My Secret Sauce 3:20 STBT Money Machine Machine

This strategy builds on my previous article, How I Make $1000 Per Month Using Credit Spreads. If you’re unfamiliar with credit spreads, I recommend reading that article first, then coming back here to read.

Please feel free to take notes :)

Trading is difficult, especially if you work a 9–5 job.

What if I told you that setting up the trade only takes 7 minutes of your time? Sounds promising?

This is not a get-rich-quick strategy. This strategy employs option selling strategies in which we profit by utilizing Option Greek — Theta, which has a potential yield of 30–35%.

What the heck is STBT?

STBT stands for Sell Today, Buy Tomorrow.

The strategy is simple: sell to open a credit spread during the market’s close for a net credit, then buy to close the spread the next day for a net debit.

The strategy works because you trade on daily time frame price action, and I only trade on momentum days. Based on previous data, it appears that we will get at least 5–6 momentum days per month.

Below is the breakdown of the Capital vs Yield:

1. Ticker: SPY
2. Capital: $2000
3. Delta: 0.12–0.14
4. DTE: 1 or 3
5. 50% premium collected per trade: $120
6. 5–6 momentum days: $120 x 6 = $720
7. ROI: 36%

The Strategy has only 2 Simple Rules:

1. Expiry should be 3 or 5 DTE
2. We place trades based on the price action of daily candles. Check the daily candle at 3:20 p.m. to see the momentum. The candle’s body should be full, with no large wicks. To be considered a momentum candle, the body must be at least 3/4 full. Please avoid this strategy if the score is 2/4. If a doji or spinning top candle forms, avoid.

What technical analysis do I perform?

1. In the daily time frame, I mark the areas of support and resistance. Do not enter any counter-trend trades, particularly near major support and resistance levels, as volatility will be high in those areas.
2. I like to use the Ichimoku cloud to filter out counter-trend trades. If you follow me on Twitter, you know how much I love trading with the Ichimoku trading system.

Confirmation Signals:

I use the following confirmation indicators: 1. For confirmation: Use a 1 hour time frame — I like to confirm with a TTM squeeze. Bull put spreads or bear call spreads should have enough momentum.

Trade Execution:

Open a 0.14 delta spread. For a bear call spread, we open above the candle’s opening price, and for a bull put spread, we open below it. There is less probability that it will break the opening price if it is a momentum candle.

What is my exit strategy?

1. Exit — Try to capture 50% premium atleast.
2. At market open, the volatility will be high due to power hours. If it’s in our favor. Exit it. Else wait atleast 10:30 to 11 for volatility to decrease.
3. If you want to hold longer and get more juice, try exiting with a TTM squeeze fade out. But, as usual, I prefer to be conservative. So my trades are very mechanical, and I like to close with a 50% premium captured.

The little homework you need to do if you really want to spend only 5–10 mins per day to set up a trade,

1. Read Macro Economic Events to make sure that you don’t have any high impact news when you’re on trade. High impact news like FOMC, FED interest rate hikes, CPI/PPI data releases are those days where technical indicators don’t work. So it’s best to avoid such days.
2. Make sure you don’t have any tech earnings on the trading week. Tech companies like AAPL, AMZN can really drive the market because of their large market capitalization.
3. Set your chart at daily time frame in one tab with preferred indicators. Observe what is the current trend. Draw price action patterns / trend lines / support & resistance and wait for a perfect signal. And 2nd tab with 1H chart with TTM squeeze indicator for trade execution.

Below are my wins using STBT Credit Spreads:

I have written a complete book on Secrets of Credit Spreads where I have explained in depth on the below. This book is not just another technical analysis course. It’s my years of backtesting / hardwork and my entire trading system condensed in a PDF document.

1. Charting techniques from the book which is worth $70
2. How do i measure volatility and the statistics behind it?
3. What are Option greeks?
4. The important greeks for spreads
5. Strategies I use to build the spreads which gives me $1000 per month
6. Walkthrough with live examples

Quick hack:

Opening trade on Friday can collect more premium because the theta decay is more on weekends. So you can capture free premium with an ease.

DO NOT TRADE DURING MACRO ECONOMIC EVENTS — No matter how good the chart is.

If you’re interested in other courses, you can check it out here.