Welcome to Simple Spreads

[Kim]

What are Simple Spreads?

The strategy description has been provided by Chris Welsh.

One of the challenges of Steady Options relates to the amount of time the trades take and the difficulty understanding them.  We have listened to our members and are creating a new strategy for the space called “Simple Spreads.”

Simple Spreads is just that – much simpler trades, that take less management, easier to enter, and easier to manage.  

The Simple Options Service highlights

• 2-3 trades per month
• Trades which are not as time sensitive as the core Steady Options strategy
• Ideal for smaller accounts but also very scalable
• Targets trades with a large margin of safety with an average profit target of 5% to 10% per trade

 

The Strategy

Simple Spreads is made up of leveraged covered calls (our version of diagonal spreads). The leveraged covered calls is basically what some traders call Leverage With A Poor Man’s Covered Call. The strategy is similar to covered calls, but the stock is replaced with DITM calls.

 

The model portfolio is $25,000. The Strategy is structured to run on accounts of $25,000 and greater, but many (if not most) of the trades will work on smaller accounts.

Leveraged Covered Calls (2x to 4x the position size of the Vertical Put Spreads) / Also known as Diagonal Spreads

• Step 1 – Identify a stock that meets our metrics and setup
• Step 2 – Purchase a deep in the money long dated call (near 90 delta or higher and 6-9 months out) on an identified stock 
• Step 3 – Sell a call against the deep in the money long dated call 3-6 weeks out

Here is how a typical setup would look like:


 

Assignment risk
 

One of the frequent questions is: what happens if the stock rises and the short calls become ITM? Is there an assignment risk?

The answer is that assignment risk becomes real only when there is very little time value in the short options. This will happen only if they become deep ITM and we get close to expiration. When it happens, we will usually roll the short options or close the trade. In any case, this is not an issue because even if we are assigned short stock, the short stock position is hedged by the long calls.

In case of the upcoming dividend, there is some assignment risk only if the remaining time value of the short calls is less than the dividend value.

Of course there is no assignment risk if the calls are OTM or around ATM.
 

Why Simple Spreads?

There are dozens of services that identify covered calls and vertical put spreads to trade.  We’re different in that (a) by pairing it with vertical put spreads we reduce market risk as the two trades profit in different market conditions, (b) by using leveraged covered calls, we increase potential returns, widen our profit window, and reduce the amount of capital necessary for such trades when compared to traditional covered call spreads, and (c) we use more than just simple “filters” to pick our stocks, using a combination of fundamental analysis, technical analysis, and momentum in picking trades.

The forums will also provide an ideal location for new options traders to begin grasping and trading both introductory and more complex options strategies without having to be tethered to a computer.

Where can you find the trade and the trade discussions?

• Simple Spreads Trades
• Simple Spreads Discussions

Here is the trading history of 2020 (before Simple Spreads was launched):



The current list of all trades since inception is available on members forums.

 

[Troy Mclure]

Thank You Kim for respecting the members with you unwavering post

 

Troy

[Tamas]

My question is, how much DD are expected? What shows the backtest data? thanks

[cwall]

Based on my location/timezone and lifestyle (full time job) I could only realistically place trades towards the end of the daily market session. What are your thoughts on being able to effectively follow this strategy with that limitation? This looks like a great service to learn from; I've studied and paper traded for many years but now finally have spare capital in portfolio to start dedicating some to options trades.

[IgorK]

I am in!

[josef458]

I see that for some months this strategy returned 0.0% (March, June & October 2022), is this because there is a prevention strategy for losses or simply because there were no positions open during those months?

Thanks

[Kim]

No trades closed in those months. 

[josef458]

3 minutes ago, Kim said:

No trades closed in those months. 

Thanks Kim, so if no trades were closed, the strategy performed well it seems (as SPX in those months was declining). Does the strategy have any prevention against a deep bear market?

 

[Kim]

Well, some of the open trades were in red, but we were waiting for recovery. The main risk management is position sizing - we usually don't allocate more than 50% of the account.

But yes, the strategy is up1.5% YTD while the markets are down 20-25% - I would say it's pretty good, considering that this is a LEVERGED BULLISH strategy.

[Kim]

On 2/12/2021 at 4:04 PM, Noah Katz said:

 

OK thanks.

The description says the strategies naturally hedge each other, but I have to wonder at the amazing performance when the S&P has risen 62% during the trading period.

Any idea what would have happened in a stagnant or falling market?

Going back to this question from 2 years ago, I believe 2022 provided a very convincing answer.

While S&P 500 was down 20% and Nasdaq 33%, our SS model portfolio produced a 2.1% gain. Considering the bear market, and the strategy being a leveraged bullish strategy, I would consider this result beyond amazing. Thank you again @krisbee for navigating the trades through this challenging market!

[Alan]

How scalable is Simple Spreads? 

[Kim]

58 minutes ago, Alan said:

How scalable is Simple Spreads? 

Recent trades include GLD, IWM, AMZN, IBIT, AMD etc so I would say VERY scalable.

[Kim]

Simple Spreads 2025 Summary:

Simple Spreads model portfolio was up 57.0% in 2025 vs. 16.4% return of S&P 500. We closed 41 trades in 2025 (3.4 trades per month).
Since inception Simple Spreads model portfolio is up 101.7% vs. 43.6% return of S&P 500.

As always, we prefer to under promise and over deliver. 

That means that if you started with a model portfolio of $25k, you would make almost $15k in 2025 alone. That's 15x return on $1k investment (the subscription fee). This doesn't even include all unofficial trades - those alone are worth 10+ years of the subscription fee. What a bargain!

Thank you again @krisbee for an amazing management of the strategy!

[Alan]

On 1/3/2026 at 1:48 PM, Kim said:

Recent trades include GLD, IWM, AMZN, IBIT, AMD etc so I would say VERY scalable.

With respect to scalability, is it possible to trade a $100,000, $500,000, or $1,000,000 account? 

[Kim]

15 minutes ago, Alan said:

With respect to scalability, is it possible to trade a $100,000, $500,000, or $1,000,000 account? 

Recent GLD, IWM and AMZN trades traded 1 spread per $25k model portfolio (average size was around $2-2.5k per spread, close to 10% of the model portfolio). So with $1M account, you would do 40 spreads. I would say very doable for those stocks. Of course some stocks are lower prices and slightly less liquid, so for the model portfolio they traded 3-5 spreads, so you would need 120-200 spreads. Still doable, but you might experience a bit more slippage. Still, if you trade a $10 spread, even paying few cents more is not a big deal percentage wise.

So the bottom line is: very easy and scalable for $100-300k accounts, a bit more difficult but still doable for $500k-$1M accounts. 

[Alan]

2 hours ago, Kim said:

Recent GLD, IWM and AMZN trades traded 1 spread per $25k model portfolio (average size was around $2-2.5k per spread, close to 10% of the model portfolio). So with $1M account, you would do 40 spreads. I would say very doable for those stocks. Of course some stocks are lower prices and slightly less liquid, so for the model portfolio they traded 3-5 spreads, so you would need 120-200 spreads. Still doable, but you might experience a bit more slippage. Still, if you trade a $10 spread, even paying few cents more is not a big deal percentage wise.

So the bottom line is: very easy and scalable for $100-300k accounts, a bit more difficult but still doable for $500k-$1M accounts. 

Thank you very much.