Low Risk SPX Day Trading Strategy [Part 2]

Why It Matters

The optimized Flatfly bot delivers a low‑risk, high‑credit SPX day‑trading method that automates entry, filters volatile moves, and improves profit‑to‑loss ratios, offering traders a repeatable edge in a crowded options market.

Key Takeaways

• Flatfly strategy opens iron butterfly at prior close with $10 wings
• Backtest shows 25% probability underlying reverts to prior close
• Applying 1.1‑standard‑deviation filter improves win rate by six percent
• Setting profit‑take at 70% maximizes average win without raising loss
• Updated bot reduces drawdown $200, adds $8,000 profit over three years

Summary

Jack Sloum of Option Alpha walks viewers through the second phase of his Flatfly day‑trading system – an iron‑butterfly spread anchored at the previous day’s S&P 500 close with $10 wings. He explains how the bot automatically opens these low‑risk contracts, scales position size, and aims to capture large credits while betting the market will stay flat for the day.

Back‑testing of the original settings revealed a roughly 25% chance the underlying reverts to the prior close, with early live results showing seven straight losses followed by two 10‑to‑1 risk‑reward wins. Sloum experimented with filters to avoid opening trades after large overnight gaps, ultimately finding that excluding days where the market moves more than 1.1 standard deviations improves the win rate by about six points and trims drawdown.

He also tested various profit‑taking thresholds. A 50% target raised the win rate to 29% but increased drawdown, whereas a 70% target delivered the best balance: higher average wins, unchanged average losses, and a modest boost in overall profitability. Applying both the 1.1‑σ filter and the 70% profit‑take, the three‑year back‑test projects $103,000 profit on a $500 daily position size, with drawdown reduced by $200 and net profit up $8,000.

The refined bot will be released to the Option Alpha community, giving traders an automated, low‑risk SPX day‑trading tool that manages exposure, filters volatile openings, and locks in gains without manual intervention. Its performance metrics suggest a scalable approach for options traders seeking high‑credit, low‑capital strategies.

Original Description

https://optionalpha.com/?ytref=111 - In this video I backtest to optimize and update the "Flat Fly" options trading strategy that trades a daily SPX Iron Butterfly.

Flat Fly bot is available here:

https://optionalpha.com/community/templates/post/flat-flyer?ytref=111

The 1 contract backtests are here:

https://app.optionalpha.com/zdte/backtester/compare/ZT2177565332321823338,ZT2177565096151137117,ZT2177565176545314525?ytref=111

The $500 position size backtests are here:

https://app.optionalpha.com/zdte/backtester/compare/ZT2177565104012068718,ZT2177565311859572637,ZT2177565173672026223?ytref=111

Check out the rest of the Options Trading 2.0 playlist in which Jack Slocum sets up and trades a $10K account from scratch:

https://www.youtube.com/playlist?list=PLhKnvfWKsu42lN7znnqW110gdw6Gy5u3f

- These are my own personal trades not trading advice.

#0dte #optionstrading #trading #spx #daytrading #ironbutterfly #ironfly

- This video is for educational purposes only and is not a recommendation for buying/selling any security. Options trading is risky, so please read our full risk disclosure here: https://optionalpha.com/legal/risk-disclosure-agreement