I’ve been meticulously logging every single one of my trades in my “Options Tracker,” documenting the wins, the losses, and the “meh” moments. Recently, I decided to stop guessing and let the data speak for itself. I dug deep into my TD Active Trader account history to answer a simple question: What is the specific pattern that consistently builds wealth?
The answer wasn’t what I expected. It wasn’t about picking the perfect stock or timing the market bottom. It was about time and patience.
Here is the strategy that is working for me—and the “gambler’s trap” that was quietly killing my returns.
The Winning Formula: “Sell High, Close Early”
My data revealed a crystal-clear pattern for success. My most consistent profits didn’t come from holding trades until expiration day to squeeze out every last cent. They came from selling premium with plenty of time on the clock and exiting as soon as I made a quick profit.
Here is the exact framework that is generating a steady income stream:
- The Setup: Sell Credit Spreads (Call or Put) with 30–50 Days to Expiration (DTE).
- The Exit: Close the trade early when I hit 30%–50% profit.
- The Timeframe: This usually happens within 3 to 10 days.
Why This Works
When you sell an option with 30-45 days left, you have “Theta” (time decay) on your side, but you aren’t yet facing the wild volatility of expiration week (“Gamma risk”). By closing the trade early, I capture the “easy” money—the rapid decay that happens when a trade initially moves in your favor—without sticking around for the market to change its mind.
The Proof is in the Numbers
Looking back at my logs, here are real trades where this strategy paid off:
- MSFT Put Spread: I sold this with ~30 days to expiration.
- Result: I closed it just 9 days later for a $30 profit (after fees). I captured 46% of the max profit in a fraction of the time.
- AMZN Put Spread: Sold with ~44 days to expiration.
- Result: I closed it 5 days later for a $35 profit. Again, I walked away with nearly 50% of the potential profit in less than a week.
- GOOG Put Spread: Sold with ~30 days to expiration.
- Result: Closed in just 3 days for a $60 profit. That’s a 37% return on the premium in 72 hours.
In all these cases, I didn’t wait around. I took the money and ran.
The Trap: The “Weekly” Gamble
The data also showed me exactly where I lose money. My biggest drawdowns happened when I tried to trade options with Low DTE (Short Days to Expiration) or held positions into expiration week.
- The Example: I sold a GOOG Put Spread with only 4 days left until expiration.
- The Reality: The stock moved against me, and because there was no time left for a recovery, the loss ballooned immediately. I ended up paying $400 to close a trade that was only supposed to make me ~$70.
Lesson Learned: Trading with less than 7 days on the clock is gambling, not trading. One bad move wipes out weeks of small wins.
My New Trading Rules
Based on this deep dive, here are the rules I am sticking to for my TD Active Trader account:
- Rule of 40: Only open new positions with roughly 40 days to expiration. This gives the trade room to breathe.
- The 50% Rule: Set a limit order immediately to close the trade at 50% profit. If it hits in 3 days, great! If it hits in 10 days, great!
- No Heroics: If a trade stalls or isn’t working after the first week (like a GOOG trade I had recently), scratch it for a small loss or break-even. Do not “hope” it comes back.
- Avoid Gamma: Never initiate a trade with less than 7 days to expiration. The risk/reward just isn’t there.
The Bottom Line
The secret to my profitable trades wasn’t being smarter than the market; it was being more disciplined with my time. By selling high DTE and closing early, I’m turning trading into a business of probability rather than a game of luck.