What is a credit spread?
A credit spread is a two-leg options trade where you sell one option and buy another at a different strike price as protection. You collect a premium upfront when you enter — that premium is your max profit. The difference between the strikes minus the premium collected is your max loss. Both are known before you place the trade, so there are no surprises.
When do the alerts come out?
Lance posts his alert at 10 AM ET. Phil posts his at 10:40 AM ET. Both include full entry details and a complete exit strategy so you know exactly how to manage the trade from start to finish.
What is the max loss on a trade?
It depends on your account size and how many contracts you trade. For members starting with around $10,000 trading 2–3 contracts, the max loss on any single trade is typically around $1,200 — though this varies trade by trade. Your max loss is always defined before you enter, so you always know your worst-case scenario upfront.
What options approval level do I need?
You need whatever level your brokerage requires for selling credit spreads. This varies by broker — most require Level 2 or Level 3 options approval. Check with your brokerage directly if you’re unsure.
How much capital do I need?
We recommend starting with at least $10,000. This allows you to comfortably trade 2–3 contracts per alert with proper risk management.
What about pattern day trading rules?
If your account is under $25,000, you are subject to FINRA’s pattern day trading (PDT) rules, which can limit how many day trades you make per week. We have a workaround guide available in our Discord that explains how to navigate this — it’s a common situation and there’s a straightforward solution.
Do I have to trade both alerts every day?
Not at all. Trade the days and alerts that work for your schedule. There’s no pressure to take every trade — the alerts will be there tomorrow.
Are there any tax advantages to trading SPX?
SPX options are Section 1256 contracts, which means they receive favorable 60/40 tax treatment — 60% of gains are taxed at the long-term capital gains rate regardless of how long you held the position. SPX is also cash-settled, meaning there’s no risk of early assignment. Always consult a tax professional for your specific situation.
What brokerage should I use?
Thinkorswim (TD Ameritrade/Schwab) and Tastytrade are both popular choices among our members for trading credit spreads. Both support the order types needed to manage these trades efficiently.