Hey Traders,
Last week, I sent out a trade alert to my followers that I want to break down for you. It’s a perfect example of why I stick to high-probability strategies, even when the market isn’t cooperating.
Here’s what the trade looked like:
The Trade Setup
On Tuesday, January 14, I sent this trade alert:
VST BUY TO OPEN 17 JAN $157.5 PUT
VST SELL TO OPEN 17 JAN $160 PUT
for $0.50 credit
This was a bull put credit spread, which means we were betting that VST would stay above $160 through expiration. With a $2.50 difference between the strike prices, that $0.50 credit gave us a 20% return on risk.
And with the trade expiring automatically on Friday, January 17, it offered the potential for that 20% return in just three days.
Why VST Was a Good Candidate
At the time of the alert, VST was trading around $169, giving us plenty of cushion between the stock price and our $160 short strike. That’s the kind of setup I look for: a trending stock with strong support well above our short strike price.
What Happened Next
Over the next few days, VST waffled. It climbed as high as $178.40 and dropped as low as $166.
For anyone trading VST with call options, it would’ve been a frustrating week. With the stock ending near where it started, directional plays like calls would’ve likely resulted in a loss.
But here’s the beauty of high-probability trades like this credit spread: we didn’t need VST to move higher — we just needed it to stay above $160.
The Results
By the time the market closed on Friday, VST had held well above $160, and the options expired worthless. That means we kept the full $0.50 credit, locking in a 20% return on risk in just 3 days.
Why This Trade Worked
This trade highlights the power of trading trending stocks in a high-probability way. Here’s why it worked:
- We didn’t need a big move. Unlike call or put buyers who need the stock to move significantly in their favor, this trade allowed us to win even if VST stayed flat or moved slightly against us.
- The odds were in our favor. With VST trading at $169 when we entered the trade, we had nearly $9 of cushion between the stock price and our $160 short strike. That gave us a strong chance of success, even with the market’s turbulence.
- We traded smart, not emotional. By using a credit spread, we limited our risk while giving ourselves a high-probability setup that worked even in a choppy week.
Final Thoughts
This is why I love trading stocks like VST in a high-probability way. Even when markets are volatile or a stock doesn’t make a flashy move, these setups allow us to stack the odds in our favor and come out ahead.
So, as you’re looking at the markets this week, remember this: you don’t need to swing for the fences on every trade. Smart, disciplined setups like this can deliver consistent returns, even in unpredictable markets.
Trade well,
Jack Carter
P.S. I use this same strategy in a slightly different way to target $500 every single week. Want to see how? Get all the details here!