Low Risk SPX Day Trading Strategy + Create a Bot to Automate
Why It Matters
The strategy provides a scalable, automated way to capture intraday SPX option premiums with limited risk, opening a high‑return avenue for traders who can manage execution costs.
Key Takeaways
- •Open daily SPX iron butterfly at 10 a.m. using prior close.
- •Strategy yields ~25% win rate with average $471 profit per win.
- •Max daily loss averages $117; max drawdown limited to $1,600.
- •Adding a 0.5% price filter improves drawdown and maintains 1,000% return.
- •Scaling to $500 risk per trade boosts profit to $92k.
Summary
Jack Sloum of Option Alpha introduces the "flatfly" strategy – a daily SPX iron butterfly opened at 10:00 a.m. with its center anchored to the prior day’s close and a $10-wide wing. The video walks viewers through the new platform feature that selects the leg based on the previous close and demonstrates how to automate the trade with a bot. The back‑tested data show a modest 25% win rate but a strong profit‑to‑loss ratio: average wins of $471 versus average losses of $117. Filtering trades by bid‑ask spread under $2 and by price proximity (±0.5% of the prior close) trims max drawdown to $1,600 over three years while delivering roughly 1,000% cumulative return. Even with a pessimistic 10‑cent slippage assumption, the strategy remains profitable, and scaling risk to $500 per trade lifts projected earnings to $92,000 with a 1.57 profit factor. Sloum highlights practical considerations such as assignment fees on SPX options and the necessity of allowing a small slippage window during entry. He then creates a live bot, sets a 10‑15 a.m. scan window, caps slippage at 10 cents, and activates the automation, noting the simplicity of the daily “open‑and‑close” cycle. He even references a biblical proverb to underscore the strategy’s day‑only focus. For traders, the flatfly offers a low‑risk, high‑return daily play that can be fully automated, reducing manual monitoring while preserving capital through tight drawdown controls. The approach is especially appealing to those seeking consistent, intraday option income without overnight exposure, though brokerage fees and slippage must be factored into net profitability.
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