| | | | My 5-Wide Spread Formula for Turning Market Fear Into Profit
Let me share something that's become one of my favorite ways to protect and profit during market uncertainty. I call them pocket puts — and they're not your typical trading position.
Right now risk in the market is rising, and you can see it in the volatility index. The VIX recently pushed above 20, and any time it's over that level, the market is signaling elevated fear. When that happens, I want some insurance on the books, and pocket puts are the simplest and most reliable way I know to take advantage of those conditions.
The 50-Cent Setup
The mechanics couldn't be simpler. I go out about 30 days to expiration and look for a 5-wide put spread on Invesco QQQ Trust (QQQ) priced around 50 cents. I start by scanning QQQ for a spread that meets three criteria: about a 30-day expiration, a 5-point width and a price near that 50-cent target. The reason is straightforward — that combination gives me the best balance between cost, probability and payout.
I also use a spreadsheet model I rely on heavily, which helps me quickly evaluate deltas, expected moves and how spreads behave under different volatility scenarios. It keeps the process consistent and lets me spot opportunities fast.
What's remarkable about this setup is the math. That 50-cent spread only requires about a 9% fall in QQQ to start working. That's incredibly reasonable compared to most options strategies I've used over the years.
The position carries a net delta of negative two, which means for every 10-point drop in the Nasdaq-100 index, about 20 cents gets added to the spread value. Do the math: you can double your money with just a 30-point drop.
Why I Call Them All-or-Nothing Bets
I need to be completely transparent here. Pocket puts are all-or-nothing bets with no stop other than the spread itself. If I buy a 10-lot and pay $500, I have to consider that an all-lost bet if it doesn't work. That's the only way to approach these trades with discipline.
But here's the beauty: if the market falls, the position could easily double or triple. I've had them quadruple when it happens real fast, turning that 50-cent premium into serious money.
Managing the trade is equally important. I always have clear exit levels. If ES goes above 7000 or VIX drops below 18, I get out of these pocket puts and salvage whatever I can of the 50 cents I paid. No emotion, no hesitation — just rules that protect capital.
The reality is, even when pocket puts don't work out, you'll probably make that money back with your portfolio or other strategies during normal market conditions. That's the cost of insurance — but when you need it, you're really glad you have it.
What I Rely On When Markets Aren’t in Panic Mode
Pocket puts are my insurance.
They’re what I use when volatility rises and I want defined downside protection on the books.
But they’re not what I rely on week after week.
When markets aren’t flashing extreme fear, I focus on something much more structured — a strategy built around trading one ticker with clearly defined setups, disciplined entries, and payout targets.
It doesn’t require a crash.
It doesn’t depend on volatility spikes.
And it’s designed to generate opportunities in normal market conditions.
If you’d like to see how I approach steady, rule-based payouts using just one ticker, I break the full structure down here:
👉 Watch the One Ticker Payouts breakdown
Trade to Win,
TBUZ
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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