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This is some timeless trading advice from a few months ago that also works in markets like this — chop, chop, chop.Â
The S&P 500 (SPY) has been bouncing between key levels, and I’m trading both sides with spreads to take advantage of the swings.
This week, I’ve set up a bull call spread at $609 by $611 — which means you buy a $609 call and sell a $611 call — and a bear put spread at $591 by $589 — which means you buy a $591 put and sell a $589 put.
These trades give me a $2 credit target with about a 30- to 40-cent debit — setting up a solid risk-reward profile.
Why spreads work in choppy markets
SPY has been stuck in a range, with $600 acting as a key level. It dipped to $600, snapped back up, and now we’re watching to see if it moves toward $610 or drops to $595.
That’s where spreads come in. Instead of making an all-or-nothing bet, I’m structuring trades to profit from either move.
A bull call spread — like my 609 by 611 — profits if SPY moves higher. A bear put spread — like my 591 by 589 — pays if it drops. The key is managing cost while keeping a good reward-to-risk ratio.
How I structure my SPY spreads
I look for a setup that gives me a credit target while keeping my debit small. As I said, I have a $2 credit target with a 30- to 40-cent debit. That means I’m putting up minimal risk for a solid payoff if one of my levels gets hit.
SPY isn’t moving in a straight line, but that’s fine.
We’ve got major earnings — coming up still, like Apple (AAPL) today — plus the PCE inflation report. With this much event risk, volatility should pick up. I expect SPY to hit either 595 or 610 before the week is out. If one of those levels goes, my spreads have a chance to lock in profit.
The bottom line is trading SPY spreads lets me stay flexible. I’m not locked into one direction — I’m playing both sides and letting the market decide which trade works.
With earnings and inflation data coming, there’s a high probability that one of these levels gets tested. If it does, I’m positioned to profit.
I’ll see you in the markets.
Chris Pulver
Chris Pulver Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.Â
P.S. 1 Trade. 1 Ticker. 1 Time a Week
That’s how my research has shown to leverage a little-known niche in the options market to target income every Monday around noon…Â
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We develop tools and strategies to the best of our ability, but no one can guarantee the future. There is always a risk of loss when trading. Past performance is not indicative of future results. The trades expressed are from an 11-year backtest on 543 trades. The result was a 97.1% win rate, an average return of 17% (winners and losers), and an average hold time of 11 days. Every “Weekly Windfall” targets roughly $1,000 in income based on $5,000 in risk, and every example is based on that same risk unless otherwise stated (Although you can get started with just a couple of hundred bucks). From 9/30/24 – 2/27/26 on 128 live trades, the win rate is 94%, 16% average return (winners and losers) with an average hold time of 12 days.
