Let's Prepare for an Even Bigger Second Half of 2024 By Larry Benedict, editor, The S&P Trader We had our busiest week this year, with a total of 12 trades… nine of which were winners. We ended the week slightly down ($408 per contract). Yet we’re still tracking strongly at the halfway point of 2024, with a total of $5,836 per contract banked in profits. And I believe the second half of 2024 could prove even more profitable for our nimble trading strategy. As of the end of June, we’ve made 139 trades for the year, of which 83.45% have been winners. We’re also averaging a 1.62% gain on capital committed per trade. That’s not 1.62% a year – our average holding period is just one day. If you made 1.62% in one day and repeated that trade over the year’s 252 trading days, you’d be up 408.24%. By comparison, the S&P 500 is up around 15% year-to-date. (And that’s tracking above its long-term 12.1% average return since 1926.) With that in mind, let’s look at this past week’s trades… 
(Click here to expand image) As always, we need to focus on the week ahead. And fair to say, there’s going to be a lot for the market to digest… Federal Reserve Chair Jerome Powell is due to speak tomorrow. On Wednesday, the market will be poring over the minutes from the Fed’s last meeting. And the big-ticket item this week will be jobs – something the Fed watches as closely as inflation. Tomorrow, we’ll get the latest Job Openings and Labor Turnover Survey data. Jobs peaked back in March 2022 (12.2 million). So now the market will be watching if the downtrend in open job numbers is accelerating after April’s 8.06 million reading. Then on Wednesday, we have initial and continuing jobless claims. And more widely anticipated jobs data comes out Friday, with both nonfarm payrolls and unemployment data. After reaching 4.0% last month – the highest level since January 2022 – any big step up in unemployment could help bring forward rate cuts. We’ll keep a close watch on how the market digests this data. That said, keep in mind that this will be a short week of trading. The markets close early on July 3 at 1 p.m. ET in advance of the Independence Day holiday on July 4. Markets will be closed that day. Additionally, our offices will be closed on July 4 and 5 this week in recognition of the holiday. That said, we’ll aim to bring you as many opportunities as we can before all that. Mailbag One question I often get asked is about the size of the gap between the strike prices of my spreads. I received the following question this week from Harold: Why do you use a $20 spread rather than a $10 or $5 spread to reduce risk? And Roger also asked: Why a $20-wide spread? It obviously puts more money on the line. Thanks, Harold and Roger, for sending your questions in. The 20-point spread I use (for example, a 5500/5480 bull put spread) has come from trading this market and strategy for decades. Sure, if the market trades right through both strikes, our losses are going to be higher than if we used a 10- or 5-point spread instead. But we also need to consider the premium we receive from each trade. By using a 20-point gap, we pay far less for the bought leg of the trade than if we used a smaller gap. So we bank far more premium from each trade. The key to doing this successfully, though, comes back to a high win rate. Having a win rate in the 80%-plus range means that the extra premium we generate from the 20-point spread more than accounts for any losses. All this said, I’ll always look for the best risk/reward offered by the available spreads. In the past, we’ve occasionally varied to a 25-point difference in strikes, for example. Yet typically I find our best setups with the 20-point range. And finally, before we close today, I’d like to share one more piece of feedback from an S&P Trader subscriber… Hello, Larry. Your S&P Trader daily recos are making a significant difference in my family’s finances, and I just wanted to share the excitement. I very much appreciate that you are keeping an eye on the daily trades and adding second-round trades for double whammy, like today, June 27! I had my biggest trade profit day today. Put $65,000 to work and made a 30% net profit on it! For the month of June, my trading has averaged $4,200/day, with one more day left in the month. That includes three losing days of $-26,000. So 12 months at this level = half mill! Did I say life-changing?! Larry, I am a little-time newbie at this type of options readings. I LOVE IT. The winning strategy by putting the trades on EVERY DAY, EVERY TRADE! It’s working after more than three decades of net losses. I could write a book on how NOT to trade the stock market from my own experiences. But I’m having too much fun and have no time to do anything but trading and riding the trails on my new e-bike! LOL 😂 I am planning a trip to Florida to visit family near Jupiter Island. I would love to stop by as one of your disciples and do just one trading day with you. I have a few questions that I believe could improve my game on the risk management side. I have done a trial, and it worked. But I would love to run it by you for a sanity check. Thanks again for introducing me to your winning options trading system! I was only able to launch in a serious way in April, after selling a property. Started with $37,000 in my trading account to reach Level 3. My first month was a great learning experience, with the $21,000 drawdown. Then I bounced right back and ended the month flat. Today, my account is sitting at $110,000! Thank you, Larry! – David W. Thanks for sharing your experience with us, David. It means the world to see how this strategy can really make a difference. Don’t forget: If you have any questions, or would like to share some of your own trading results, you can send them to feedback@opportunistictrader.com. I’m always glad to interact with readers. Regards, Larry Benedict
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