Selling options based on spread price increase.

Yes lots of people do this and are basically just trying to make a few points in premium to scalp the market on ODTE SPY plays.

Most are buying multiple contracts and only needing a small bump in premium to see quick profits.

As they see the market trends they pick a price ( normally $1.00 – $2.00 away from current price) that they think market will get to and then buy an option and as price gets closer to the price of the option you bought the premium also goes up giving you the chance to sell your option for the profit in premium difference.

Let’s say you bought a call for $1.00 above current price and premium cost you .90 per contract and you bought 10 contracts so you paid $900 as a max loss. With SPY the spread is small so you can quickly see profit if you are going in the right direction.

As price trends your way you would see profits increase as premium increases as it’s getting closer to your target price. With the correct direction you can see profits of 10-30% on your play and then close out for quick profit.

If premium price went from .90 to $1.08 that would be 20% on your original $900 you put up when you bought the 10 contracts and a good time to close out or at lease trim your position and keep a couple contracts if you feel confident in a larger move still in play.

Do this a few times a day or do 20 or 30 contracts instead of 10 and you can easily see how people are growing accounts so quickly.

But on the other hand you can also see how people blow up accounts by going the wrong direction or just having to take a loss if they have bad money management.

You also have to be aware of decay and even though the price may hit what you predict the option premium could be lower than you expected due to it taking all day to get there and then the option premium just goes lower and lower so you need to pay attention to what price action and time of day you are doing this strategy.

So yes it works and you can be very profitable if you are in the right direction and playing the price action during the higher volume traded times of the day.