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Thursday, October 9th
“Happiness always looks small while you hold it in your hands, but let it go, and you learn at once how big and precious it is.”
– Maxim Gorky
Major Market Events
- Stocks cool off from highs — Risk appetite eases as indexes pull back and gold rally stalls
- Shutdown risk back on the tape — GOP warns of targeted pain, adding policy uncertainty for growth and spending
- Fiscal pressure mounts — Tariffs are higher while U.S. interest costs top $1T, a headwind for deficits and rates
🤔 My Thoughts
Delta — It’s More Than Just an Airline
A plain-English follow-up to last week’s theta lesson — plus the live PLTR spread I put on
Last week I walked you through why I use late-week credit spreads and what theta (time decay) actually does for us into Friday.
Today I want to go one level deeper and show you the simple delta trick I use to keep my risk/reward in check. Then I’ll round it out by walking you through the PLTR bull-put spread I placed live on yesterday’s Profit Panel.
First, a quick refresher on what theta is in plain English:
Options lose value as time passes, and that decay speeds up the closer you get to expiration.
That’s why I like selling premium later in the week. I don’t need huge moves in the underlying stock — I mainly need price to not run through my short strike while the clock is counting down to expiration.
Delta Selection
When I’m selling a credit spread, I’m usually operating roughly in the 25–30 delta range for the short option.
Quick note on delta notation: Brokers show delta as a decimal between –1.00 and +1.00 (e.g., –0.30 for a put or +0.30 for a call). Traders often say “30 delta” as shorthand for what is technically 0.30. That’s how I’ll be writing in this post.
Could I go way out of the money and collect a tiny credit with a 5–10 delta? Sure.
But the reward-to-risk gets silly out there. Around 30 delta, the trade is still a high-probability bet, but the credit is meaningful enough to make the effort worthwhile.
It’s also a clearer mental frame: at about 30 delta, I think of the risk/reward as roughly 1 to 3. That keeps me honest about what I’m putting at risk for what I’m trying to make.
Real Life Trade
Here’s how that looked in yesterday’s real life PLTR trade:
On the show I opened a bull-put spread in Palantir (PLTR).
A bull put is simple, I sell one put below the current stock price and I buy another one further down.
With this kind of trade, I want the stock to stay above my short put by expiration. (short put is just another name for the put you sell)
For yesterday’s trade, I aimed for $0.39 credit, but ultimately got filled at $0.35.
The plan from there is for PLTR to stay above $177.50 by Friday, and let theta do the lifting.
A few quick execution habits that help me:
- Pick the range first. I set my short strike near 25 to 30 delta to line up the risk/reward.
- Define the risk. Using a credit spread caps my risk. I know the worst case up front.
- Manage by the clock. If I can buy the spread back for a decent chunk of the credit, I’ll often just ring the register and move on. This usually happens if the stock risks quickly, which makes the spread less valuable. I can then buy it back for less than I sold it and close out the trade.
- Use GTC exits. I like to stage Good-Til-Canceled profit targets so a favorable pop can tag me out without having to babysit the trade.
- Avoid market orders in a flush. If I need out, I’ll use a sensible limit based on where the spread is trading to avoid bad fills.
Put it all together and the workflow is about being steady and consistent, not heroic: pick a reasonable delta, sell a defined-risk spread late in the week, and let time be part of the edge.
Last week was the “why” (theta). This week is the “how” (delta).
Next time you’re queuing up a Friday expiration, try setting your short strike near that 20-30 delta range and see how much cleaner the whole decision feels.
👉 Click here to watch the on-demand replay!
To Better Trading,
Alex Reid
P.S. My urgent World Premiere goes LIVE on Sunday, October 19th, 2025 and I’ll be co-hosted by my friend Graham Lindman. Go here now to join my FREE Telegram channel to get secret insights about my new service and reminders closer to the World Premiere.
