The Market gives 5 possible outcomes with options. Move up a lot , move down a lot, stay the same, move up a little, Move down a little . Four of those work in this strategy
I did this strategy and got up and saw the SPx gapped down 40 points below my break even I lost a 1000 just to make 200. I'm going to something else it's not sustainable for small accounts
why is this a small account strategy? do big accounts dont want a low risk high win rate? so on big accounts you would only buy more contracts, or what is the difference to a big account strategy?
You would likely want to use the SPX for a larger account. However, it's a small account strategy, as the risks are very small, and the gains would be too small for a larger account with aggressive growth goals. For example, to scale up using the XSP for a butterfly spread, you can find yourself trading 40 contracts (a butterfly uses 4 options), so 10 lots would be 40 contracts multiplied by whatever your commissions are. You could find yourself spending $26 to open the trade and $26 to close, which can significantly eat into your profits. You can implement the strategy demonstrated in this video on a large account, but it may not be worth it for some people. Every small account strategy can be run on a large account but not every large account strategy can be run on a small account as there may not be enough margin or a small account would be at too much risk. Someone with $100k in their account may be looking at small account strategies to use, but a person with $5k in their account would only be able to run a strategy for an account that uses a little margin. Simply stated, this is a small account strategy because it can be run on a small account.
