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 10-15 minutes after market opens β avoid buying during gap up openings when the market is in a downtrend (< 50 DMA), you could buy in the 2nd half or when the market dips
- 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
π‘ 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.
π 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 WorkWhy SPY OTM Calls?
π 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.
β‘ Volatility
SPY moves on average 0.7β0.8% (4β5 points) daily. These swings are enough for cheap OTM calls to pop 10β20% without requiring a massive rally.
π° Cheap Exposure
Far OTM calls often cost just $100β200. Risk is capped at the premium.
β° 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.
Sample Trades
οΏ½ Sample Trades: These are sample trades demonstrating the strategy in action. Returns can vary significantly depending on market conditions and timing, but this shows the disciplined process and importance of sticking to a systematic plan.
π Sample Trade Examples
β’ Real trade entries and exits
β’ Actual broker fills and prices
β’ Transparent profit/loss tracking
β’ Strategy performance analysis
Daily Trade Log
Daily SPY options trades with complete entry/exit data. Expiry dates are ~100 days out: August 2025 trades used January 2026 options, September 2025 trades used February 2026 options.
| Date Date | Entry | Strike | Expiry | Exit | P&L |
|---|---|---|---|---|---|
| 19-Aug19-Aug-25 | 1.31 | 730C | 30-Jan30-Jan-26 | 0.98 | -$33 |
| 19-Aug19-Aug-25 | 1.31 | 730C | 30-Jan30-Jan-26 | 1.27 | -$4 |
| 20-Aug20-Aug-25 | 1.52 | 725C | 30-Jan30-Jan-26 | 1.77 | $25 |
| 20-Aug20-Aug-25 | 1.52 | 725C | 30-Jan30-Jan-26 | 1.66 | $14 |
| 21-Aug21-Aug-25 | 1.11 | 730C | 30-Jan30-Jan-26 | 1.24 | $13 |
| 21-Aug21-Aug-25 | 1.11 | 730C | 30-Jan30-Jan-26 | 1.39 | $28 |
| 22-Aug22-Aug-25 | 1.38 | 725C | 30-Jan30-Jan-26 | 1.53 | $15 |
| 22-Aug22-Aug-25 | 1.38 | 725C | 30-Jan30-Jan-26 | 1.57 | $19 |
| 25-Aug25-Aug-25 | 1.3 | 730C | 30-Jan30-Jan-26 | 1.31 | $1 |
| 25-Aug25-Aug-25 | 1.3 | 730C | 30-Jan30-Jan-26 | 1.38 | $8 |
| 26-Aug26-Aug-25 | 1.23 | 730C | 30-Jan30-Jan-26 | 1.35 | $12 |
| 26-Aug26-Aug-25 | 1.23 | 730C | 30-Jan30-Jan-26 | 1.41 | $18 |
| 27-Aug27-Aug-25 | 1.34 | 730C | 30-Jan30-Jan-26 | 1.45 | $11 |
| 27-Aug27-Aug-25 | 1.34 | 730C | 30-Jan30-Jan-26 | 0.9 | -$44 |
| 28-Aug28-Aug-25 | 1.4 | 730C | 30-Jan30-Jan-26 | 1.45 | $5 |
| 28-Aug28-Aug-25 | 1.4 | 730C | 30-Jan30-Jan-26 | 1.04 | -$36 |
| 29-Aug29-Aug-25 | 1.31 | 730C | 30-Jan30-Jan-26 | 1.18 | -$13 |
| 29-Aug29-Aug-25 | 1.31 | 730C | 30-Jan30-Jan-26 | 1.34 | $3 |
| 2-Sep2-Sep-25 | 1.43 | 730C | 20-Feb20-Feb-26 | 1.57 | $14 |
| 2-Sep2-Sep-25 | 1.43 | 730C | 20-Feb20-Feb-26 | 1.63 | $20 |
| 3-Sep3-Sep-25 | 1.3 | 735C | 20-Feb20-Feb-26 | 1.48 | $18 |
| 3-Sep3-Sep-25 | 1.3 | 735C | 20-Feb20-Feb-26 | 1.76 | $46 |
| 4-Sep4-Sep-25 | 1.33 | 735C | 20-Feb20-Feb-26 | 1.48 | $15 |
| 4-Sep4-Sep-25 | 1.33 | 735C | 20-Feb20-Feb-26 | 1.76 | $43 |
| 5-Sep5-Sep-25 | 1.3 | 740C | 20-Feb20-Feb-26 | -- | Open |
| 5-Sep5-Sep-25 | 1.3 | 740C | 20-Feb20-Feb-26 | -- | Open |
| TotalTotal | -- | -- | ---- | -- | $198 |
πΈ Weekly Trade Snapshots
Real broker screenshots documenting actual trades:
π 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.
Daily Execution Plan
- β’ Enter around 9:40β9:45 AM EST, give 10β15 minutes for trades to settle
- β’ If there is a gap up opening in a downtrend (< 50 DMA) avoid buying in the morning
- 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
π Performance Tracking: Returns can vary significantly depending on market phase and conditions, but this demonstrates the disciplined process and importance of sticking to a systematic plan with consistent execution.
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: β10% to β15% (~β$13 to β$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)
π Bull Market Scenario (80% Win Rate)
| Trade Type | Win% Win Rate | Avg+ Avg Profit | Avg- Avg Loss | Yearly Net Yearly |
|---|---|---|---|---|
| Type A (3-day max) | 80% wins | $15 $15 per trade | -$15 -$15 per trade | +$2,250 |
| Type B (5-day max) | 80% wins | $30 $30 per trade | -$30 -$30 per trade | +$4,500 |
| Combined Total | 80% overall | $22 $22 avg | -$22 -$22 avg | +$6,750 |
βοΈ Neutral Market Scenario (50% Win Rate)
| Trade Type | Win% Win Rate | Avg+ Avg Profit | Avg- Avg Loss | Yearly Net Yearly |
|---|---|---|---|---|
| Type A (3-day max) | 50% wins | $15 $15 per trade | -$15 -$15 per trade | $0 |
| Type B (5-day max) | 50% wins | $30 $30 per trade | -$30 -$30 per trade | $0 |
| Combined Total | 50% overall | $22 $22 avg | -$22 -$22 avg | $0 |
π Bear Market Scenario (30% Win Rate)
| Trade Type | Win% Win Rate | Avg+ Avg Profit | Avg- Avg Loss | Yearly Net Yearly |
|---|---|---|---|---|
| Type A (3-day max) | 30% wins | $15 $15 per trade | -$15 -$15 per trade | -$1,500 |
| Type B (5-day max) | 30% wins | $30 $30 per trade | -$30 -$30 per trade | -$3,000 |
| Combined Total | 30% overall | $22 $22 avg | -$22 -$22 avg | -$4,500 |
Market Scenario Summary:
π Bull Market (80%): Strong upward momentum, +$6,750 yearly profit
βοΈ Neutral Market (50%): Sideways/choppy conditions, breakeven scenario
π 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.
π 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 expiryβone targeting quick 15% gains in 3 days, the other holding 5 days for 30-40% profits or accepting lossesβthe 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 comfortβyou 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.
β οΈ 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.