Options trading sometimes feels overwhelming due to the amount of choices you have to make. Strategies, gurus, YouTube videos, stocks, ETFs, brokerages, DTEs, Greeks, backtests, tradeoffs: endless variables and confusion…it can be exhausting. Particularly if you are losing money, or if you are spending all your waking hours doing research and turning trading into a second full time job. My purpose with this website is to simplify your decision making. This style of trading is not for everyone. This website is not for everyone and I’m good with that. But for busy professionals wanting to generate consistent options income with a conservative Put Credit Spread system in about 15 minutes a week – you have found your home! Admittedly, I do not know everything about options. However, there are many people who may be more knowledgeable traders, but they have much lower returns. Consider me your guide or coach, but I am not a guru. I am likely just a few years ahead of you on your options trading journey. In my mind, our world class returns since 2020 are a combination of simplicity, consistency, discipline and self awareness. I do not try to outsmart the market and I really don’t believe that is possible. I simply trade what is in front of me with lots of small winners and a few small losers. Over time, those wins add up! One of the ways I coach people is recommending a consistent spread width.
What the Put Path Options Trading System offers is a framework to reduce the amount of decisions you need to make. You need a process that makes the important decisions for you before emotion enters the picture. Our Set Ups are pre-defined. Lesson 11 of the Put Path 101 Course focuses on spread width. Our standard starting point is a $5-wide Put Credit Spread. Spread width has a significant impact on your maximum risk, buying power reduction, premium collected, position sizing, trade management, and ultimately your psychology as a trader. By standardizing the width of the spread, we remove another variable from the trading process and make the entire system easier to understand and execute. Remember our goal is to Transform Your Life By Simplifying The Way You Trade: we do that by helping you simplify decisions, define risk, follow the probabilities, and spend less time trying to predict what the market is going to do.
Here is an example of a $5-wide Put Credit Spread: you would sell a $395 Put and simultaneously purchase a $390 Put for protection. The difference between those two strikes is $5, so the spread is $5-wide. Because each standard options contract represents 100 shares, the total spread risk is $500 per contract. If you receive a $0.50 credit for establishing the position, you collect $50, and your actual maximum loss is $450. That simple calculation is one of the major advantages of defined risk options trading. Before you ever enter the position, you know the boundaries of the trade. You are not selling an naked Put with unlimited risk. You are using a long Put to define the other side of the position. The result is a trade with a clear maximum loss. That does not make the trade safe, and it certainly does not guarantee that you will make money, but it does make the max risk quantifiable. One problem that I see is not necessarily that traders do not understand risk; it is that a few undefined losses blow out their account or that they are stuck gambling by buying Puts and Calls. This is why defined risk Put Credit Spreads are the foundation of the Put Path rather than simply one strategy among many.
So why do we use $5-wide? After all, if a $1-wide spread has less money at risk, wouldn’t that automatically make it better? Nope: options trading is almost always about trade offs. Yes, a narrower spread reduces the amount of risk and capital required for the position, but it also produces a smaller credit. If you use the same underlying, similar DTE, and similar short Put Delta, a $1-wide spread produces a substantially smaller premium than a $5-wide spread (potentially around 60% less premium). That creates a trade off: you may have to trade more contracts to generate a meaningful amount of premium and potentially increasing transaction costs and execution complexity. A very narrow spread can also become less forgiving when the underlying moves against you because the distance between the short and long strikes is smaller. Which brings us to our second trade off, should we make the spread width wider? A wider spread will generate more premium, but it also consumes more buying power and creates a larger maximum potential loss. At some point, you have to ask whether the additional premium is worth the additional capital and risk. This is where our $5-wide rule of thumb becomes useful. It is not a magical number that is optimal for every trade. It is a standardized starting point designed to create a practical balance between premium, defined risk, buying power reduction, liquidity, and simplicity. The goal is not to discover the mathematically perfect spread width every time you place a trade, it is to create a repeatable process that works across the different underlyings in a systematic fashion.
Standardization becomes particularly powerful when you combine spread width with the other parts of the Put Path framework. Remember UDDSS? Underlyings, Delta, DTE, Spreads, and Size. Each aspect has a role and they are all woven together. The Put Path uses a diversified group of underlyings, generally targets a 15 Delta short Put, uses approximately 28–32 Days To Expiration, establishes a $5-wide spread as its standard structure, and begins with one lot before scaling position size. Once those parameters are established, you no longer need to sit in front of your platform asking yourself whether today’s trade should be a $1, $2, $5, $10, or $25 wide spread. That may sound insignificant, but eliminating unnecessary decisions is one of the most important forms of stress reduction available to an options trader. Decision fatigue can become a hidden source of inconsistency and ultimately burnout. One week you choose a narrow spread because you want to minimize risk. The next week you choose a much wider spread because you want more premium. Then the market moves against you and you realize that you are carrying considerably more risk than you planned. Standardization prevents that decision making drift and reduces emotion based trades.
This simplicity becomes even more valuable when you start thinking about the Put Path Options Trading System as a portfolio rather than as a collection of individual trades. The system is built around a diversified group of underlyings rather than trying to identify one stock that is going to move in the right direction. The current Put Path framework includes QQQ, GLD, IWM, IBIT, SPY, USO, DIA, IYR, SMH, TLT, XBI, and VIX, giving the strategy exposure to different sectors and asset classes in the markets rather than concentrating everything in a single name. The $5-wide structure gives those individual trades a common risk framework, while laddering spreads the expiration dates across the portfolio. That structure works together with the our approach to initiating trades after favorable short term weakness (1% down move) and managing positions according to predefined rules (200% stop loss trigger). The result is not a strategy that attempts to eliminate losing trades. That would be impossible. Instead, it is a framework designed to make individual losses manageable while allowing profitable trades to overcome them as part of the overall portfolio.
There is also a psychological advantage to standardizing spread width. When a position moves against you, the market is already providing enough uncertainty without requiring you to reconsider the basic architecture of your trade. Imagine watching a $5-wide spread that was originally sold for a $0.50 credit begin moving toward a $1.00, $1.25, or $1.50 value. Because the structure is standardized, over time you already understand inherently what the numbers mean. The Put Path’s predefined 200% stop loss trigger rule gives you a predefined target so you know when your trade hits $1.50 that you need to close it asap. Instead of asking, “What should I do now?” you already know what to do. That is a much calmer scenario. It is also why the Put Paradise approach emphasizes discipline and probability rather than prediction. You do not know which individual trade will win. You do not know when the next large market decline will occur. You cannot control volatility, headlines, economic reports, wars, politicians, or overnight gaps. You can control your spread structure, your position size, your entry rules, and your exit rules. Those are the controllables. The purpose of a trading system is to establish those rules before the market gives you a reason to abandon them.
This does not mean every options trade you will ever make should be $5-wide. The appropriate spread width is influenced by the price of the underlying, the available strike increments, liquidity, account size, and the amount of capital you are willing to risk. We typically use a 100 to 1 ratio as a rule of thumb to start looking at larger increments. For a $5,000 underlying, you should consider scaling up to a $25 or $50-wide spread. This becomes especially relevant as you move from ETFs such as SPY, QQQ, and IWM toward larger index products such as SPX, NDX, and RUT. A $5-wide spread on a $500 underlying is a very different proportional structure from a $5-wide spread on a $25,000 underlying. In reality, the $5-wide spread won’t even be offered in the $25,000 underlying. For larger underlyings, the spread width needs to increase proportionately so that the structure continues to make practical sense. It’s important that you understand why spread width matters and then establish a consistent rule appropriate for the product you are trading. We are simply trying to take a potentially complicated decision and turn it into a manageable one: helping you remove unnecessary decisions in real time from the process so that you can execute with greater consistency.
The final takeaway from Lesson 11 is simple: good options trading is not necessarily about finding the most exciting trade. Admittedly, this is not the most exhilarating way to trade. Hopefully, you have other excitement in your life to satisfy those needs! I believe options trading should be profitable…full stop. Boring, with a high Annual Rate of Return, is great! The less options trading drama you have, the more profitable you typically are. A $5-wide Put Credit Spread gives the Put Path a common foundation for defined risk, position sizing, buying power planning, and trade management. Combined with the other elements of UDDSS, it turns a long list of options decisions into a repeatable process. Our goal is not to encourage you to trade more frequently, take bigger risks, or chase every opportunity from your Discord group. It is to simplify options trading so that it can fit into the life of a busy person without becoming a second full-time job. I encourage you to create a free Put Paradise account to become a member and follow the Real Time Trades, where you can see how the Put Path framework is being applied in actual market conditions. The objective isn’t to blindly copy another trader. It is to learn the process, understand the risk, practice the mechanics, and develop the discipline to make your own decisions. Options trading will always involve risk. No spread width eliminates risk, but when you define the risk, standardize the process, and remove unnecessary decisions, trading will be considerably simpler. As an added bonus, it will be less stressful and likely more profitable as well.
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