Managing Editor’s Note: On Wednesday, our colleague Jeff Brown is teaming up with Wall Street quant Jason Bodner to unveil a powerful trading tool…
It’s a system Jason created to pinpoint what he calls “Secret AI Stocks” – little-known stocks that, on the surface, might not even seem connected to artificial intelligence… but could transform into the next trillion-dollar super stocks.
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If you haven’t signed up to attend Jeff and Jason’s event yet, be sure to RSVP with one click now. They’ll reveal everything tomorrow night…
The S&P 500 (SPX) has been moving in an extremely narrow range. The bull market seems to be getting tired.
Despite some sizeable intraday swings, SPX was up just 0.9% year-to-date (YTD) as of last Friday’s close. It’s tough going… and frustrated investors are starting to pull their hair out.
Yet this is the kind of market where you can really pull some great gains.
Because while SPX is barely hanging on to positive territory, we’re already up 17.35% YTD (based on a $10,000 account) at The S&P Trader. And we’re not even finished with February.
So today, I want to run through some recent trades to show how we put our strategy to work…
At The S&P Trader, we focus on generating steady income using options.
We use a “bear call spread” strategy, where we sell a call option above the current index price to generate a credit. We simultaneously buy a call option at a level above the sold call to act as protection in case the index rallies unexpectedly.
As long as SPX stays below both call option legs, we get to keep the whole credit as our max profit. (We go into bear call spreads in more detail here.)
Today, though, I want to look at our other strategy: a “bull put spread.”
This past week, we generated $4.19 (or $419, since an options contract is for 100 shares) per option contract from two trades. (Anyone who traded two contracts per trade could have made $838, and so on.)
A bull put spread is like a bear call spread, except we want SPX to stay above the levels of the two put option legs.
So, let’s see how our trades played out…
On Tuesday, February 17, SPX looked like it would close above the 6780 level, and I recommended a bull put spread.
In simple terms, we sold an SPX 6780 put and bought an SPX 6765 put simultaneously. The trade expired that same day. And for entering that spread trade, we received $2.50 (or $250) on a one contract basis.
Check out the chart…
S&P 500 (SPX)
Source: e-Signal
If SPX closed at or above 6780, that $250 premium would remain ours to keep. But if my analysis proved wrong and SPX fell, our bought put leg would cap any potential losses.
In this case, the most we could have lost was the difference between the two strikes (6780 – 6765 = 15) minus the premium we received for placing the trade. That’s $15 minus $2.50, which equals $12.50 (or $1,250) per contract.
That risk/reward might seem asymmetrical ($2.50 reward versus $12.50 risk), but you need to take our win rate into account. In well over 1,000 trades since The S&P Trader’s launch, our win rate is tracking at 80%. Overall, the winners exceed the impact of any losses.
In this trade, SPX briefly dipped below 6780, but it closed out the day 63 points above that at 6843. The full premium remained ours to keep.
Two days later, we did it again. This time, we placed a 6790/6775 bull put spread. In other words, we sold an SPX 6790 put and bought an SPX 6775 put. Again, the trade expired that same day. For this trade, we earned $1.69 in premium (or $169) per contract.
Things were far more clear-cut with this trade. SPX traded as low as 6833 on the day before closing at 6861 (71 points above our option legs).
Take another look:
S&P 500 (SPX)
Source: e-Signal
As you can see, while we had more buffer with the second trade, we generated less premium. That highlights a trade-off you need to consider…
The closer your put options are to SPX’s current price level, the more premium you’ll receive. But that trade comes with a higher chance of losses if SPX moves against you.
On the other hand, if the strike prices are farther away, there might be little chance of a loss. But you’ll receive less premium.
Getting that balance right can be challenging. But decades in the market have taught me where that balance lies. As I shared above, we get it right about 80% of the time.
Market dynamics have changed in 2026. As we’ve already seen, “buying the dip” is no longer paying the same dividends.
That’s where our strategy at The S&P Trader fits into the picture. If you’re looking for a strategy that can hand you a steady income throughout the week, you don’t need to look any further…
Happy Trading,
Larry Benedict
Editor, Trading With Larry Benedict
Reading Trading With Larry Benedict will allow you to take a look into the mind of one of the market’s greatest traders. You’ll be able to recognize and take advantage of trends in the market in no time.
