I’ve been trying to create a bull spread strategy with Claude I previously had one created, which I ran for a while until I hit a very huge loss and honestly just put a bad taste in my mouth and I kinda got away from options selling ever since but I have now been wanting to get back into it. Here’s what I have so far. Looking to start with about 2k in my account using Robinhood
THE SETUP
• Underlying: XSP only (cash-settled, Robinhood-friendly)
• Structure: Bull Put Spread (sell put / buy put $5 lower)
• DTE: 7–14 days
• Short strike delta: 0.10–0.15
• % OTM: 3–5% out of the money
• Target premium: $0.60–$0.85 per spread
• Contracts: 1 at a time (max collateral \~$440)
ENTRY RULES (all must be true)
1. VIX below 20
2. SPX above 21-day EMA
3. No CPI, FOMC, or NFP within 48 hours
4. IV Rank below 50
5. Bid/ask spread is $0.05–$0.10 or tighter
EXIT RULES
• Profit target: Close at 50% of max gain (\~$30–$40 per trade)
• Stop-loss: Close immediately if spread value hits 1.5x premium collected (e.g. collected $0.70 → close at $1.05)
• Delta stop: Also close/roll if short strike delta crosses 0.22 — whichever triggers first between this and the 1.5x stop
• Never hold to expiration
ROLLING RULES
• If delta approaches 0.22 but hasn’t breached yet, consider rolling down and out (buy back spread, resell at lower strike 1–2 weeks further out for additional credit)
• Only roll early — never when already deep in the loss
SKIP TRADING WHEN:
• VIX above 20
• SPX below 21-day EMA
• Major macro event within 48 hours
• OpEx week (3rd Friday of month)
• IV Rank above 50
• Large red candles or heavy downward momentum that day
EXPECTED P&L PER TRADE
• Avg win: \~$30–$42 (at 50% profit close)
• Realistic loss: \~$105 (at 1.5x stop)
• Max possible loss: \~$440 (if spread goes to full value — should never happen with stop rules)
• Win rate target: 85–92% based on delta probability
QUESTIONS FOR THE COMMUNITY:
1. Is 7–14 DTE the right window or should I be going shorter/longer?
2. Is the 1.5x premium stop too tight — will it get triggered by normal intraday noise?
3. Any thoughts on rolling vs just closing for a loss?
4. Is there anything in the entry rules I’m missing that experienced traders watch for?
5. Would you change the spread width from $5?