The ONE Options Strategy I will ALWAYS have in my account

Finance-specific summary (options strategy for small accounts)

Instruments / tickers mentioned

• SPX: S&P 500 index options
• XSP: mini SPX options, stated as 1/10 the size of SPX

Core idea / recommendation

Use a mini SPX put condor structure for smaller accounts because it’s presented as:

• Cash-settled (helps avoid share assignment/margin issues)
• European style (no early exercise/assignment)
• Potential favorable US tax treatment, referenced as the 60%/40% capital gains rule

The strategy is framed as aiming for high win rate with net profitability over the long term if traded correctly.

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Why SPX / XSP are preferred (as stated)

SPX advantages

• Cash settled: account is credited/debited in cash; no assignment risk.
• European style options: exercise occurs only at expiration (no early assignment).
• US resident tax note: mentions “Capital gains may benefit from the 60% 40% tax treatment.”

Why start with XSP (mini SPX)

• Smaller contract size (1/10 SPX) makes it easier to size the trade and (per the example) harder to hit max loss for the same $ risk target.
• Example framework used:
  • Risk target: ~$350 max loss
  • For SPX vs XSP, the long put strike is positioned farther away on XSP, so a given % move corresponds to only 1/10 the index move—making max loss less likely unless price moves much farther.

Stated scaling guidance

• Start with XSP for small accounts.
• Move to SPX once account size is ~$50,000+ (speaker’s stated threshold).

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Liquidity / “open interest is low” objection (speaker’s explanation)

• The speaker argues that low open interest does not prevent fills/exits.
• Key point: market makers are prepared to transact at bid/ask prices and are expected to take orders at acceptable prices.
• Practical takeaway: if you can’t get filled at the mid, you may need to improve price toward the natural bid/ask level—and not assume low open interest means there are no counterparties.

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Methodology / step-by-step framework (construct an XSP put condor)

The video’s construction approach is essentially:

1. Choose the short put strike (credit spread leg) using delta targeting:

   • More aggressive: higher delta (speaker mentions 15–20 delta examples)
   • More conservative / higher win rate: lower delta

2. Set max risk for the trade (example given: $1,000 max risk).

3. Convert max risk into approximate strike spacing:

   • Speaker’s rule-of-thumb example: ~10–11 points wide to target ~$1k max loss.

4. Build the put credit spread:

   • Receive credit from the short put / long put spread.

5. Use part of the credit to finance a smaller put debit spread (embedded inside the condor):

   • This “embedded debit spread” is claimed to:
     • Eliminate upside risk (“no risk to the upside”)
     • Define the condor’s profit zone and protection.

6. Adjust strikes iteratively to target outcomes:

   • Higher win rate / more conservative: push farther out / adjust lower strikes and align the debit spread accordingly.
   • Higher max profit / more aggressive: shift strikes to increase max profit, at the trade-off of lower probability of success (“pop”).

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Pop / win-rate targeting (qualitative + approximate)

• The speaker states win rate can be “up to like 90+ percent” depending on where the short put is placed.
• Mentions example POP:
  • ~94% POP for one configuration (“at-the-money” debit spread constructed to optimize profit zone).
• Important framing:
  • High win rates don’t mean no losses. For example, 85% win rate implies 15% losses.
  • Losses should be smaller on average due to the structure, aiming for net profitability over time.

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Condor flavors discussed

• Put condor (slightly bearish):
  • Put credit spread + financed put debit spread (embedded protection)
• Call condor (slightly bullish):
  • Opposite logic (call credit spread financing a call debit spread)

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Quantitative comparisons vs simpler credit spread / other condor types

Put credit spread vs put condor (same short strike and max risk)

Speaker claims the put condor offers:

• Higher win rate by ~2%
• Harder to hit max loss (the long put is positioned farther away; speaker uses an example like 524 vs 521 reasoning on the “put side”)
• Higher max profit, with improved risk-to-reward:
  • Example comparison:
    • Put spread: max profit ~$106 for ~$500 max loss (roughly framed as ~1:5 risk-to-reward)
    • Put condor: max profit is materially higher with max loss roughly similar (speaker describes risk-to-reward near ~1:1)

Put condor vs iron condor

• Speaker argues iron condors have:
  • Lower win rate
  • Worse risk-to-reward
• Even when comparing with similar POP (speaker mentions ~72%), speaker claims:
  • Iron condor risk-to-reward ~1:5
  • Put condor risk-to-reward closer to ~1:1

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Example construction outcomes (XSP put condor)

No specific expiration dates are provided in the subtitles.

• Example 1

  • Target max risk: about $1,000
  • Max profit ~ $111
  • POP ~ 90+% / ~94% (speaker cites ~94% for a configuration near an at-the-money debit spread)

• Example 2 (more aggressive)

  • Max profit ~ $193 (with ~$1,000 risk)

• Example 3 (more aggressive)

  • Max profit ~ $256

• Example 4 (most aggressive shown)

  • Max profit ~ $322
  • Max loss ~ $878 (speaker notes max loss near $1,000 depending on adjustment)

Explicit trade-off stated:

• Higher max profit ↔ lower POP/win rate

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Key cautions/disclosures mentioned

• Strategy is framed as “safe” and net profitable over the long term if you trade it correctly, but:
  • High win rates still imply losses.
• No explicit “not financial advice” disclaimer appears in the provided subtitles.

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Presenters / sources

• Presenter: Davis (referred to as “David” / “Davis”)
• Source referenced: CBOE website (for SPX cash-settled and execution-style details)