The 10% Credit Spreads Trading Guide & Handbook

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Table Of Contents

Disclaimers:
[FREE] The Ultimate Credit Spreads Trading System Course
The Goal:
The Investment Thesis:
Proof This System Works ($5k to $200k Case Study):
10% Credit Spread Graduates
Our Six Proven Strategies (Step By Step):
The Squirrel Strategy Trading Guide:
The Squirrel Strategy Backtest:
The True Turtle Strategy Trading Guide:
The True Turtle Strategy Backtest:
The Short Play Strategy Trading Guide:
The Short Play Strategy Backtest:
The Winning Whale Strategy Trading Guide:
The Winning Whale Strategy Backtest:
The Elastic Bounce Strategy Trading Guide:
The Elastic Rejection Strategy Trading Guide:
The Elastic Rejection Strategy Backtest:
The 10% Credit Spreads Trading Rules:
Close When The Strike Is Broken Rule Exit Rule:
Minimum Credit Collection:
Trade Sizing:
Early Exit Rules:
Counter Trend Trading Rules:

Disclaimers:

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representation, warranty or guarantee that similar results will be obtained by you.
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The Goal:

Consistently make a 5% every single month using proven credit spread strategies even if you
work-full time or have very little free time.

The Investment Thesis:

“The trend is your friend until it bends” - Technical Traders

“If you diversify, control your risk, and go with the trend, it just has to work” - Larry Hite

Trend following is the idea of following the big waves in the market. Trend Following is not
predicting future moves or price levels but instead responding to what the market is currently
doing. Mathematical studies have shown that Trend Following achieves superior returns to buy
and hold investing especially during market uncertainty.

Credit spreads are a directional strategy that by default have a 70% win rate when you follow
best practices and industry standard rules. However, when you combine credit spreads with a
Trend Following strategy, you can statistically bump your win rate up to 75-80%. When you add
simple entry and exit rules, you can bump your win rate up to 80-90%.

Proof This System Works ($5k to $200k Case Study):

The image above shows your estimated return based on following our alerts since 2005.

Example from the image:

Starting balance: $5,000
Risk per trade (based on max loss): 3%
Time frame: 15 years
Ending balance: $246,966

Example from my account and trading style:

Starting balance: $100,000
Risk per trade (based on max loss): 2%
Time frame: 15 years
Ending balance: $1,333,789

10% Credit Spread Graduates

Read the case studies and stories of our members who graduated here!

Our Six Proven Strategies (Step By Step):

There are strategies created for every type of market phase: bullish, bullish but weak, sideways,
bearish, bearish but weak, and overextension.

The Squirrel Strategy Trading Guide:

This strategy is used in neutral and sideways markets when no clear direction is present or
detectable. This strategy has one of the lowest historical win rates because of how volatile and
unpredictable the market is during this phase.

Entry Rules:

● Wait for the stock to be inside the Trending Band ( +1 and -1 standard deviation of the
200 day moving average )
● Determine your short strike price for the put credit spread ( stock close price x 96% )
● Determine your expiration date ( current date + 12 days then round up to the next Friday
)
● Setup the trade in your broker (sell to open the short strike price, buy to open the strike
price below the short price, and use the expiration determine above)
● Ensure you are collecting at least the minimum credit for placing the put spread
● If you can collect the minimum credit, officially place the trade

Get alerts sent straight to your phone and email when this trade setups here

The Squirrel Strategy Backtest:

The True Turtle Strategy Trading Guide:

This strategy is used in bullish and uptrending markets. This strategy has the most occurrences
because the market is statistically trending up for a vast majority of the year.

Entry Rules:

● Wait for the stock to be between the green and yellow line ( +1 and +4 standard
deviations of the 200 day moving average )
● Determine your short strike price for the put credit spread ( stock close price x 97% )
● Determine your expiration date ( current date + 12 days then round up to the next Friday
)
● Setup the trade in your broker (sell to open the short strike price, buy to open the strike
price below the short price, and use the expiration determine above)
● Ensure you are collecting at least the minimum credit for placing the put spread
● If you can collect the minimum credit, officially place the trade

Get alerts sent straight to your phone and email when this trade setups here

The True Turtle Strategy Backtest:

The Short Play Strategy Trading Guide:

This strategy is used in bearish and downtrending markets. This strategy has one of the least
occurrences because the market doesn’t downtrend long. It typically crashes fast then slowly
recovers.

Entry Rules:

● Wait for the stock to cross below the red line ( -1 and -3.5 standard deviations of the 200
day moving average )
● Determine your short strike price for the call credit spread ( stock close price x 104% )
● Determine your expiration date ( current date + 9 days then round up to the next Friday )
● Setup the trade in your broker (sell to open the short strike price, buy to open the strike
price above the short price, and use the expiration determine above)
● Ensure you are collecting at least the minimum credit for placing the put spread
● If you can collect the minimum credit, officially place the trade

Get alerts sent straight to your phone and email when this trade setups here

The Short Play Strategy Backtest:

The Winning Whale Strategy Trading Guide:

This strategy is used during market recoveries after a large crash. This is a bullish strategy that
capitalizes on the market recovery when big institutions and investors typically buy in and push
the market prices higher.

Entry Rules:

● Wait for the stock to cross back above the bottom yellow line ( -4 standard deviations of
the 200 day moving average )
● Determine your short strike price for the put credit spread ( stock close price x 96.5% )
● Determine your expiration date ( current date + 14 days then round up to the next Friday
)
● Setup the trade in your broker (sell to open the short strike price, buy to open the strike
price below the short price, and use the expiration determine above)
● Ensure you are collecting at least the minimum credit for placing the put spread
● If you can collect the minimum credit, officially place the trade

Get alerts sent straight to your phone and email when this trade setups here

The Winning Whale Strategy Backtest:

The Elastic Bounce Strategy Trading Guide:

This strategy is used when the market has hit the mathematical low after a crash. Unlike the
other strategies, this is a mean reversion strategy and has one of the highest historical win
rates.

Entry Rules:

● Wait for the stock to cross below the bottom yellow line ( -4 standard deviations of the
200 day moving average )
● Determine your short strike price for the put credit spread ( stock close price x 96.5% )
● Determine your expiration date ( current date + 14 days then round up to the next Friday
)
● Setup the trade in your broker (sell to open the short strike price, buy to open the strike
price below the short price, and use the expiration determine above)
● Ensure you are collecting at least the minimum credit for placing the put spread
● If you can collect the minimum credit, officially place the trade

Get alerts sent straight to your phone and email when this trade setups here

The Elastic Bounce Strategy Backtest:

The Elastic Rejection Strategy Trading Guide:

This strategy is used when the market has hit the mathematical high after a strong run up.
Unlike the other strategies, this is a mean reversion strategy and has one of the highest
historical win rates.

Entry Rules:

● Wait for the stock to cross above the top yellow line ( +3 standard deviations of the 200
day moving average )
● Determine your short strike price for the call credit spread ( stock close price x 103% )
● Determine your expiration date ( current date + 19 days then round up to the next Friday
)
● Setup the trade in your broker (sell to open the short strike price, buy to open the strike
price above the short price, and use the expiration determine above)
● Ensure you are collecting at least the minimum credit for placing the put spread
● If you can collect the minimum credit, officially place the trade

Get alerts sent straight to your phone and email when this trade setups here

The Elastic Rejection Strategy Backtest:

The 10% Credit Spreads Trading Rules:

There are few rules that I use to generate a 5 - 10% a month return and limit my losses. These
are statistically proven to increase my win rate because they are based on mathematical and
capital preservation principles.

Close When The Strike Is Broken Rule Exit Rule:

There are multiple ways to manage and close your credit spreads trade. The most profitable
approach is to Hold The Trade Until Expiration; however, this method will lead to assignment
risk, pin risk, sky high emotions and requires strict adherence to risk management rules. The
next most profitable approach is to Close When The Strike Is Broken. This means closing the
trade when your short strike is broken.

This exit rule states that if the stock will break your strike price by the market’s close, then you
should exit the position. This means you will be closing positions in the last 30 minutes of the
trading day or early the next morning given your strike price is broken.

Minimum Credit Collection:

You want to make sure you are collecting enough credit based on your historical win rate to give
you a long term positive expectancy. This means you need to make enough money on your
winners to offset your infrequent but larger losses that occur.

The minimum credit you should aim to collect varies based on the win rate. I provide this
minimum credit in the 10% credit spreads inner circle program, but a rough rule of thumb to use
(with the strategies shared in this document) is .15.

The minimum credit formula is as follows for $1 wide:

Minimum credit = (55 - .5W) / 100, where W stands for the historical win rate

Trade Sizing:

This is an important rule and lesson to remember when trading credit spreads because of how
large your max loss tends to be. This is why you should strive to trade small and trade often to
increase your number of occurrences and decrease the amount one single loss impacts you. I
recommend putting no more than 10% of your account, but realistically, no more than 5% of our
account into any one trade.

Using the Close When Strike Is Broken exit rule, your losses will be way less than 5%. This is
because we use 5% as our max sizing rule based on the max loss for the trade. However, our
actual loss will be around 30-50% of the max loss. Therefore, if you are using 5% of your
account per trade, the actual loss per trade will be closer to 1.5-2.5% of your total account since
we are closing the trade early and taking a smaller loss than the max loss.

Early Exit Rules:

Exiting position can statistically help you increase your win rate, take profits sooner, and allow
you to redeploy your money into another trade faster, but there are some rules with exiting the
trade early since the strategies mentioned above assume you are holding until expiration (given
that your strike has been broken).

You can exit positions early if you can close the credit spread for .05 or less per spread AND
there are more than 4 days left until expiration

Counter Trend Trading Rules:

If you are trading a counter trend strategy like the elastic rejection or elastic bounce strategy,
then there are some rules that you need to follow as you will be betting against the trend.

The first rule is to only enter the trade on a strong green day for the rejection strategy or a
strong red day for the bounce strategy and prioritize going further out of the money over
collecting more credit. The second rule is to size down and only trade with 50% of your typical
position size. This makes any losses less devastating to your account and allows you to
emotionally see the trade through to completion easier. The third rule is to immediately close out
any open counter trend positions if one of your counter trend trades expires in the money. For
example, there is a 75% chance that one rejection trade expiring in the money will result in the
next rejection trade being a loss which means it’s best to close the trade early.

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