The 7DTE SPX Options Selling Playbook

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HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS

WHAT IS THIS TRADE AND WHY DO WE LOVE IT?

It is a simple options-selling strategy that can be used to build a daily, weekly, and monthly income stream. We sell credit spread options (mostly put credit spreads) on the S&P 500(SPX) with 7 days to expiration (DTE) time frame. Traders have an opportunity to trade this strategy 250 times a year, if desired. This strategy is repeatable day after day and is a great way to trade options fairly near to expiration with a high probability of success without a lot of drama or stress. We have strict entry and exit rules that govern our trades. There are no complicated indicators or signals, or chart reading strategies. The success of this trade depends on two things: Theta Decay and High Probability (Delta).

The general concept of this trade is to sell a credit spread that starts with a 90% chance of expiring worthless. Essentially, it would take 2 standard deviations (expected moves) in the full-time frame of the trade to put the short strike in the money. It also decays quickly and approaches zero well before expiration the majority of the time. So, we expect most of the time, we can get around 60% of the premium collected to decay in about 1/3 of the time to expiration. Then get out and do it again. By always being in the trade, we take advantage of the fact that time is always passing, which is the only sure thing with options. Being two expected moves away at the start allows the position to filter out a lot of noise and still make money without a lot of stress over where the market is trending.

Details of the trade or my trading rules developed over a year plus worth of trades:

1. Trade SPX only. Why? It has less price swings than other Indexes and it is big enough that the commissions/fees are negligible. Since its inception in 1951 through 2024, the percentage of up days is 53.7% and the percentage of down days is 46.3%. The SPX slow upward-grinding Index with lower volatility than other tradable indices. Out of the occurrences through 2024, the number of 2 days in a row that SPX has been down is 1103 (6%). 3 days in a row is 575 (3.13%). 4 days in a row is 252 (1.37%).

This tells us that the SPX is steadily climbing up, and the probability of consecutive down days that could potentially turn this strategy into a loser is minimal based on historical data available. Also, the average daily move by percentage in the SPX is < than 1%. This is perfect for a time decay option to be consistently profitable since our strikes are usually 2% or more out of the money. We do not trade the RUT and NDX because these are too volatile for our taste. Since SPX is a conglomerate of 500 companies, it is less volatile than a single equity. Also, SPX has a lot of liquidity, meaning we can get in and out of the trade more easily.

2. Puts Credit Spreads work best: It has more trading volume, and the premiums are higher. Also, you are generally further away from being in the money (ITM). The vertical call spread will have to be closer ITM to get our desired premium. That adds a higher risk factor to this trade.

3. Enter credit spreads at 8-12 Delta. Volatility will affect this trading decision. The basic principle is to get as far out of the money (OTM) as possible and still be able to collect your desired premium. Having your short strike at least 2% OTM has proven to work out best for trading success.

4. Adjust the width to get the desired premium. Usually, 30 to 40 wide spreads work best. ROI is 3.33%/2.5% per trade.

5. Works best. If the VIX is in the 23 to 15 range and the At the Money Implied Volatility (ATMIV) is less than 25%.

6. Preferred premium target: $1.60 - $2.00. Higher than that is too “risky,” and lower than that potentially keeps you in the trade longer than 3 days.

7. Entrance strategy: Trade entry is more art than anything else, and there is a lot of wiggle room here. In the grand scheme of things, it isn’t crucial to the success of this trade. Sometimes we place our trades in the morning, and sometimes we wait until the end of the market day.

8. Out of The Money (OTM) Standard: We have found out that if your short strike is 2% or higher OTM, then you have a high probability of success.

9. Preferred profit target: $1.05 collected. I like to net $100 per contract and tack on the $5 for commissions and fees. Depending on market conditions, I may exit before then and take less than a full profit. Word of Caution: You will be tempted to lower your DTC from $1.05 to collect a few extra dollars of premium. Our experience with this trade is that your risk goes up exponentially because you will be in the trade longer, and the risk of the trade going against you is increased. We advise you to take your profit and move on to the next trade.

10. Exit strategy: Close the trade at either of the 3 trading scenarios. First, after collecting a $1.05 profit from the original collected premium. Second, if your position has reached your strategy’s loss point, the first line of loss mitigation defense is to roll your position to a further expiration date. This strategy is a dynamic way to rescue a losing trade, BUT you must be familiar with your broker’s procedure. Below is a more detailed rolling explanation and an example. Third, choose to take an outright loss and start a new trade. The last two options are entirely dependent on your individual risk tolerance and your trading plan’s risk/reward strategy.

11. Hold for a maximum of 3/4 days. Word of abundant caution: do not be tempted to carry this trade further than that. You might get lucky and make it out of this trade with a profit, BUT the risk is too great that you will lose even more money. Our advice based on experience with this: close the trade, forget about it, reset yourself, and start a new trade or roll the position only if you have assessed the risk and the capital involved to extend the trade. With 240+ trading days available, do not over-focus on any single trade or even a couple of losers in a row. Keeping your losses to a minimum lets you make it up quickly and keeps you in the trading game.

12. Rolling a current losing position: can be a strategic way to manage risk, lock in profits, or extend duration. We have found that this can be a true game-changer and reduce your loss exposure tremendously. You are extending time risk, but you are not adding additional contracts or moving closer to being in the money. Rolling a losing position should be a major part of your trading plan’s exit strategy.

Here are some advantages and disadvantages of rolling. It is wise that you consider all the advantages and disadvantages before deciding to roll:

Rolling Advantages

Extend Time

Rolling out preserves your strategy while buying more time for your thesis to play out (e.g., if the price is near a short strike).

Increase Credit

You can sometimes collect additional premium, especially when rolling to wider spreads or further out.

Adjust Strikes

You can reposition your strikes based on new technical or market data—improving the probability of profit.

Reduce Stress

Rolling early can avoid last-minute gamma risk or volatility spikes near expiration.

Rolling Guidelines:

Consider rolling the spread out to a further date when the debit premium hits double your collected premium or when the SPX drops>1%.
Depending on market conditions, day 1 or day 2 are optional, and you may decide to hold the position past a premium of 4.5. Starting on day 3, rolling should be seriously considered to mitigate risk.
A good roll should include these three characteristics: Collect additional credit, improve probability, or extend time with controlled risk.
Roll 1-2 days out and below your current spread short strike price. Roll to the closest day where you can find additional credit
Roll multiple times until profitable. For example, on October 10, 2025, when SPX dropped 2.71%, multiple members rolled 3 times until profitable.
It is difficult to get additional credit when both the short and long legs are ITM. Credit is more easily attained when SPX is trending up or neutral.
Consult your Broker’s Trading Platform: Each broker has a different procedure for rolling, and you should be very familiar with the correct process and the fees involved

Typical Trade Example: 5970/5940 7DTE put credit spread on SPX. Premium collected: 1.75. Margin: $3000(1 contract). Delta: -.10. Exit strategy: Exit for profit at .70 Debit or loss at 3.50, or roll this position to a further expiration. Profit $105. Loss: -$175 before broker platform fees and commissions. This example is based on my own risk/reward preferences

Typical Rolling Example: Rolling example: Trade executed 5970/5940 7DTE put credit spread on SPX. Premium collected 1.75. Margin $3000 (1 contract). On day 3, you are at a loss of 3.50, including the premium collected. You decide to roll out for 2 days and essentially make this a 6DTE trade. You can roll to the same strikes and get a .10 cent credit (not always the case). The market stays flat, and Theta decay works for you, and in 2 days, you collect your $1.00 premium instead of taking a $3.50 loss.

What is possible?

There is an average of 21 trading days per month. I will plan on trading at least 19 of those days. With a 10 delta, I will be profitable on 17 days and not profitable on 2 days on average each month.

Numbers for 1 contract:

Average profit per trade: $100. Daily ROI: 3.33% or 2.50% depending on spread width.

Average loss per trade: $175. Daily ROI: -5.83% or -4.375% depending on spread width.

Average Monthly profit: $1700

Average Monthly loss: $350

Average Monthly P&L: $1350

What size trading account do I need?

A trading account with $30,000 to $100,000 is ideal. A $10,000 account is the minimum.

Results:

A year’s plus worth of statistics:

I started trading this strategy in May 2024.

As of September 2025

Number of trades: 223

Wins: 211

Losses: 13

Winning Percentage: 94.61%

Average Net Earnings: $446

Average Net Loss: $ 458

Net Earnings: $100,060

We implemented Rolling as a loss mitigation strategy in May 2025. Since this implementation, none of our members have recorded a loss. The Founders have had 6 months with no losses and rolled losing positions on 4 occurrences.

Disclaimer: Your results may be better or worse depending on your trading style, risk tolerance, and reward goals.

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What Will Help Make You A Consistently Profitable 7 DTE Trader?

1. Study the markets: Studying the markets, specifically SPX, will eventually bring understanding. Understanding will, in turn, bring success. Success will bring rewards, and suddenly the market will be to you what it actually is: an impersonal arena in which those with understanding get paid to trade. With understanding, you will trade wisely. With understanding, you will see how simple trading can actually be. With understanding, you will garner money from the markets. With the successes you have in the marketplace, you will develop the courage of your convictions. Because trading will give you pleasant experiences, rather than fear. With one pleasant trading experience after another, you will begin to love trading. When you love to trade, you will no longer have fear.

2. Realize you don’t know the future: Let’s face it, you can’t tell me with absolute certainty where the next tick will be. You truly do not know what is going to happen next. Trading is based on probabilities. Sticking with the probabilities is what makes us successful in the long run. Do not overly focus on a single trade. Over–focusing causes levels of fear to rise. You will become overly cautious. You will hesitate. You will try too hard to avoid mistakes. You will probably lose.

3. You won’t win every trade: The problem of fear is made much worse if you enter every trade with the “expectation” that it should be profitable. Be aware! After several winning trades, the feeling of invincibility supersedes being logical. This can lead you to ignore your strategy’s core trading rules and to stretch those into a trade that you would not normally take. Executing a consistently profitable trade is “only” accomplished by sticking to a proven plan. Ignoring your trading plan seems to get much easier after a couple of winners. Never mistake genius for profits derived from your trading strategy’s plan. Genius loses money. Properly executed trading plans make money.

You may be wondering:

Why do you use to 8-12 delta?

Ideally, I’d always use an 8-12 delta (depending on market volatility) strikes if the market were constantly grinding higher. So, I try to execute my trade to an ideal short strike in the 8-12 delta range for a credit. This causes the delta value to drift when the market is in a downturn, with an expectation that eventually the position will work its way back to the ideal delta values. Because we work from values so far away from the current price, we can afford to drift closer (12 Delta) from time to time, knowing that the probabilities still favor the position decaying.

Why do you only want to collect a $1.00 premium? Theta decay. This 7DTE trade gains approximately 60% of the premium collected in the first 3 days or less, depending on market volatility and price action. In my opinion, to keep a trade open for more days to only collect the remaining 40% or less of the premium remaining is an unwise use of capital and leaves your position at risk in case the market goes against your position. You can use the capital to start a new position and collect a new 60% instead of waiting the extra days to collect the remaining 40%. Over the long haul, you will make more money.

How much do you scale up your position to compound profits?

This trade can provide a lot of cash. We see three ways to use the cash that is generated. One is to take it as income. Another is to save it as a buffer for when the market is going crazy. And finally, cash profits can be plowed back into the trading account, increasing the amount of contracts traded. So, how much to use for each purpose? It depends mostly on how much income you need from the position. We know that taking income distributions means that money can’t be used to build the size of the account. But we take out what we need to. With what’s left over, we have a simple rule. We want as much cash available in the account as is required for the strategy. For example, in a $40,000 account, if we have $20,000 capital required for five 40-wide spreads, then we want to have $20,000 cash buying power available and not used. If the account grows to a $48,000 balance, we can add another contract- that’s another $4,000 at risk and another $4,000 cash buying power sitting in the account.

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Books that we recommend that will make you a better trader:

1. Trading in the Zone and The Disciplined Trader by Mark Douglas.

2. Mastering the Mental Game of Trading by Steven Goldstein.

3. Best Loser Wins by Tom Hougard.

4. Thinking in Bets by Annie Duke.

5. Rich Habits (Second Edition) by Thomas Corley.

6. The Mind Game of Trading by James B. Caldwell.

7. The Mental Game of Trading by Jared Tendler.