Why the Best Strategy? Core Philosophy

Most low-risk options trades benefit from Delta neutrality. The Ride Trade — the other most-used strategy — is a great example: profits

are possible even when the market moves abruptly in unexpected directions.

The Best Strategy belongs to the same family. It is also Delta-neutral at its core, but it adds a key ingredient: technical analysis. Instead of placing strikes mechanically, we use support and resistance levels to position the trade where the market is most likely to be supported. We then make adjustments based on where the market is moving relative to those levels.

This is the trade-off:

• Pure Delta-neutral strategies: simpler, fewer judgment calls, but no edge from market structure.

• The Best Strategy: more discretionary, but uses chart context to improve the probability of profit and reduce the chance of severe losses.

Like most of my strategies, this one is an INCOME TRADE. It benefits primarily from Theta (time decay). Where it differs from the Ride Trade is that the Best Strategy is Vega NEGATIVE, which means it gains additional profit when implied volatility falls. This makes it especially powerful when entered in a high-IV environment.

Why use SPX (or RUT) instead of SPY or IWM?

• Fewer contracts are required, which means lower trading fees.

• SPX/RUT are Section 1256 contracts in the United States, which bring potential tax advantages (60% long-term / 40% short-term capital gains treatment, regardless of holding period. (Note: Confirm your local rules with a tax professional.)

• They are CASH-SETTLED — no early assignment risk, no stock to manage. You can hold the trade all the way to expiration if you choose.

• The profit potential of a one-lot trade is around $2,000.

Even though we use charts to support our decisions, I am still a Delta-neutral trader at heart. When Delta gets outside the range I am comfortable with, I take action to bring it back. We will cover exactly how to do that in Chapter 9.