Mare Nostrum

Payoff lines of a call and a put spread

Optional Option-Spread Paper Books, Off by Default

Not financial advice. This is a research and paper-trading project. Any numbers here are examples from past data, not promises, and the rules come with no guarantee. Paper trade first and decide for yourself. Part 4. The starter pack includes two option-spread books. Both are optional, paper only and DISABLED by default.

Not financial advice. This is a research and paper-trading project. Any numbers here are examples from past data, not promises, and the rules come with no guarantee. Paper trade first and decide for yourself.

Part 4. The starter pack includes two option-spread books. Both are optional, paper only and DISABLED by default.

What they are

Both books use the same uptrend rule as TREND-HOLD, applied to SPY, QQQ and GLD on the first trading day of each month, with one spread per ETF at a time.

  • SWE-SPREAD is a bull call debit spread: buy a call near the month-end close and sell one about 5% higher, on the monthly expiry at least 45 days out.
  • SWE-PUTCS is a bull put credit spread: sell a put near the close and buy one about 3% lower.

Both exit 7 calendar days before expiry. There is no stop exit and no profit target. A spread is skipped when the quotes are missing or the bid/ask spreads are too wide, and the task never guesses a price.

Why they are off

  • They are leverage on the same idea. They lean the same way as TREND-HOLD, so in an uptrend the three can stack on the same ETF. The Close Loop prints a combined worst-case line for that reason.
  • They need broker permissions. Credit spreads usually need a higher options level than debit spreads.
  • The example results are weaker per dollar of risk. In my original research the stock books made more per dollar of drawdown. The put credit spread looked fine on model prices but came out about break-even when I stress-tested it with fuller costs. Those are past-data examples, not promises.
  • They add work. Marks, expiries and exits all need attention.

If you switch them on

Treat them as a process test: every entry day looked at and logged, fills close to the quotes, no rule breaks. The put spread book has its own paper account and an end condition, either a number of closed spreads or a date you choose. Passing that test never proves the strategy works, and it never opens a live trial by itself.

Switch a book on with its STATUS line in the Close Loop prompt.

Last: how to set it up yourself.