SPY Option Trading Strategy: Far OTM Calls, 100-Day Expiry, Short Holds

SPY options trading strategy reference. Daily far OTM calls with 100-day expiry, dual approach targeting quick gains or time-based exits with strict risk management and disciplined execution.

Strategy Overview

Our SPY options trading strategy follows a dual-approach, disciplined system:

  • 1 Buy 2 out-of-the-money call options daily using ~100-day expiry with strikes around 12-15% OTM from spot price (e.g., if SPY is at 640, buy 730 calls; if SPY is at 600, buy 680 calls), targeting low delta (around 0.065) and manageable theta decay (around -0.02 per day)
  • 2 Trade A: 3-day maximum hold targeting 15% profit
  • 3 Trade B: 5-day max hold targeting 30-40% profit or whatever loss
  • 4 Enter daily at market open β€” no complicated analysis
  • 5 Position size: $130-$180 per contract ($260-$360 daily total)
  • 6 Base capital requirement: $10,000 to stay in the game after a period of drawdowns which is inevitable

πŸ’‘ Dual Strategy Logic: Trade A captures immediate 15% profit opportunities with strict risk management, while Trade B holds for the full 5-day duration targeting 30-40% profits or accepting whatever loss occurs. This balances quick wins against longer directional exposure.

πŸ“š New to Options Trading?

Before diving into this strategy, make sure you understand the basics of options trading, including key concepts like Delta and Theta that are crucial to this approach.

Watch: Understand How SPY Options Work

Why SPY OTM Calls?

πŸ“ˆ Liquidity

SPY options are among the most liquid contracts in the world, even deep out-of-the-money. Tight spreads allow fast entries and exits.

⚑ Volatility

SPY moves on average 0.7–0.8% (4–5 points) daily. These swings are enough for cheap OTM calls to pop 10–20% without requiring a massive rally.

πŸ’° Cheap Exposure

Far OTM calls often cost just $100–200. Risk is capped at the premium.

⏰ Manageable Decay

With 100 days to expiry, theta decay remains modest for the short 3-5 day holding periods.

Daily Dual-Trade Cycle

100-Day Expiry Cycle

  • January: Buy June expiry calls (both trades)
  • February: Switch to July expiry
  • March: Move to August expiry

Same strikes: Both Type A (3-day) and Type B (5-day) use identical contracts for simplicity.

Daily Process

Each trading day at market open:

  • β€’ Type A: 3-day max hold, 15% target
  • β€’ Type B: 5-day hold, exit at any P/L
  • β€’ Total daily investment: $260-$360
  • β€’ Process is mechanical, not predictive

Trade B Logic: The 5-day hold targets 30-40% profits but accepts whatever loss occurs, providing longer directional exposure to balance quick wins from Trade A.

Live Trading Journal - Starting August 19, 2025

πŸš€ Starting August 19: We're launching this strategy live on August 19, 2025. Follow this page for daily trade updates, real fills, and actual profit/loss results. All trades will be documented with transparency.

πŸ“ˆ Follow for Daily Updates

β€’ Real trade entries and exits
β€’ Actual broker fills and prices
β€’ Transparent profit/loss tracking
β€’ Strategy performance analysis

Daily Trade Log

Trade Entry SPY Strike Entry Exit Exit P&L
A 8/19 639 730C 1.31 0.98 8/21 -$33
B 8/19 639 730C 1.31 1.27 8/26 -$4
A 8/20 639 725C 1.52 1.77 8/22 +$25
B 8/20 639 725C 1.52 1.66 8/22 +$14
A 8/21 638 730C 1.11 1.24 8/22 +$13
B 8/21 638 730C 1.11 1.39 8/22 +$28
A 8/22 640 725C 1.38 1.53 8/22 +$15
B 8/22 640 725C 1.38 1.57 8/22 +$19
A 8/25 644 730C 1.30 -- -- Open
B 8/25 644 730C 1.30 -- -- Open
A 8/26 642 730C 1.23 -- -- Open
B 8/26 642 730C 1.23 -- -- Open
Total +$77

πŸ“Έ Weekly Trade Snapshots

Real broker screenshots documenting actual trades:

πŸ“ Trading Notes: All entry and exit prices shown are net prices after adjusting for brokerage fees and commissions. Each options contract represents 100 shares, so $1.31 per share = $131 per contract. Trade A targets $1.50 ($150) for 14.5% profit. Trade B will exit at 5 days regardless of profit or loss. Delta around 0.065, Theta around -0.02 per day.

Daily Execution Plan

  • β€’ Enter around 9:40–9:45 AM EST, give 10–15 minutes for trades to settle
  • β€’ Buy 2 identical OTM call contracts
  • β€’ Use current 100-day expiry cycle
  • β€’ Target strikes 12-15% OTM from current SPY (e.g., SPY at 640 β†’ 730 calls)
  • β€’ Calculate % OTM: (Strike Price - SPY Price) / SPY Price Γ— 100
  • β€’ Delta around 0.065, Theta around -0.02

Trade Rules

  • β€’ Type A: Exit at 15% profit or 3 days max
  • β€’ Type B: Exit at 30-40% profit or 5 days max at whatever loss
  • β€’ Position size: $130-$180 per contract ($260-$360 daily total)
  • β€’ No emotions, purely mechanical execution

πŸ“Š Performance Tracking: This table will be updated daily with real trade data. Check back each evening for entry/exit details, actual fills, and running P&L totals.

Profit & Loss Scenarios

Assumptions:

  • β€’ 100-day expiry cycle: Use options with approximately 100 days to expiration (Delta ~0.065, Theta ~-0.02)
  • β€’ Strike selection: Target 12-15% OTM from SPY spot price using formula: (Strike Price - SPY Price) / SPY Price Γ— 100
  • β€’ 2 trades per day: Trade A (3-day max hold, 15% target) + Trade B (5-day max hold, 30-40% target or whatever loss)
  • β€’ Trade A profit target: +15% (~+$20)
  • β€’ Trade A average loss: –10% to –15% (~–$13 to –$27)
  • β€’ Trade B: Hold max 5 days, targeting 30-40% profit or exit at whatever loss (typical 30% loss/gain)
  • β€’ Total trades per year: ~500 (2 per trading day Γ— 250 days)
  • β€’ Position size: $130-$180 per contract

Dual Strategy: Trade A seeks immediate 15% gains with strict 3-day risk control, while Trade B holds for the full 5-day duration targeting 30-40% profits or accepting whatever loss occurs, balancing quick wins with longer directional exposure.

Yearly Results Model (500 Trades)

Base Capital: $10,000 recommended for 2 daily contracts ($260-$360 daily exposure)

πŸš€ Bull Market Scenario (80% Win Rate)

Trade Type Win% Avg+ Avg- Yearly
Type A (3-day max) 80% wins $15 -$15 +$2,250
Type B (5-day max) 80% wins $30 -$30 +$4,500
Combined Total 80% overall $22 -$22 +$6,750

βš–οΈ Neutral Market Scenario (50% Win Rate)

Trade Type Win% Avg+ Avg- Yearly
Type A (3-day max) 50% wins $15 -$15 $0
Type B (5-day max) 50% wins $30 -$30 $0
Combined Total 50% overall $22 -$22 $0

πŸ“‰ Bear Market Scenario (30% Win Rate)

Trade Type Win% Avg+ Avg- Yearly
Type A (3-day max) 30% wins $15 -$15 -$1,500
Type B (5-day max) 30% wins $30 -$30 -$3,000
Combined Total 30% overall $22 -$22 -$4,500

Market Scenario Summary:

πŸš€ Bull Market (80%): Strong upward momentum, +$6,750 yearly profit

βš–οΈ Neutral Market (50%): Sideways/choppy conditions, breakeven scenario

πŸ“‰ Bear Market (30%): Declining/volatile conditions, -$4,500 yearly loss

Note: All scenarios assume 250 trades each (500 total yearly). Type A uses $15 profit/loss, Type B uses $30 profit/loss per trade.

Implementation Guide

Start with small position sizes and track your trades carefully. Monitor daily performance and results to refine your execution.

πŸ‘‰ Remember: Discipline and consistency are key to success.

Conclusion

This strategy is about process, not prediction. By buying 2 OTM SPY calls daily with 100 days to expiryβ€”one targeting quick 15% gains in 3 days, the other holding 5 days for 30-40% profits or accepting lossesβ€”the approach balances frequent small wins against longer directional exposure.

Equities recover over time, SPY reflects the S&P 500's long-term upward trend, and even far OTM options remain liquid enough to trade actively.

Capital Allocation & Risk Management: The $10,000 capital requirement for 2 daily contracts ($260-$360) is designed for psychological comfortβ€”you can handle inevitable drawdowns without emotional decision-making. This allocation should represent only a small percentage of your overall portfolio based on your risk profile. Want to scale up? Follow the same ratio: 20 contracts would require ~$100,000 allocated to this strategy bucket.

The edge here is discipline: keep losses small, keep winners frequent, and repeat the process every day with proper capital allocation that lets you sleep well at night.

⚠️ Disclaimer

This content is for educational purposes only. We are not financial advisors. Trading options involves risk, and you can lose your entire premium. Always do your own research and trade responsibly.