AI Response:
| Rank | Strategy | Income | Consistency | Risk | Overall |
|---|---|---|---|---|---|
| #1 | Covered Calls (30D, ~15% OTM or 63D, 10–12% OTM) | High | Extremely High | Moderate | BEST overall |
| #2 | Put Credit Spreads (21–30D, 10–12% OTM, 5% wide) | Medium | Very High | Low | BEST risk-adjusted |
| #3 | Cash-Secured Puts (30–45D, 7–10% OTM) | Highest | High | Moderate-High | Good |
| #4 | Collars (e.g., 63D 10%/10%) | Low | Medium-High | Very Low | Safest |
Optimal covered calls for RSP (income consistency)
Most consistent option-income (highest % of positive option cycles)
Best: ~30 trading days (≈ 6 weeks), 15% OTM call
- Positive net option income in backtest: ~98.85% of cycles
Using the latest close in your file (RSP ≈ $199.40):
- Sell ~30D call @ ~15% OTM → strike ≈ $229.3 (≈ $229)
Why this wins for RSP: equity indexes trend up more than bonds, so farther OTM reduces “premium being given back” during rallies and smooths results.
Better yield while still very consistent (more practical for many)
Strong balanced setting: ~63 trading days (≈ 3 months), 10–12% OTM
- More premium than 15% OTM, still high consistency
At $199.40:
- 63D, 10% OTM → strike ≈ $219.3 (≈ $219)
- 63D, 12% OTM → strike ≈ $223.3 (≈ $223)
Optimal put credit spreads for RSP (defined risk consistency)
(Assuming 5% wide vertical: long put is 5% of spot below the short put.)
Most consistent spread income (highest % positive cycles in grid)
Best: ~21 trading days (≈ 1 month), short put 12% OTM, 5% wide
- Positive cycles: ~97.83%
At $199.40:
- Sell put ≈ $175.5 (≈ $175)
- Buy put ≈ $165.5 (≈ $165) (~$10 width)
Balanced (more credit, still very steady)
Best balanced: ~30D, short put 10% OTM, 5% wide
- Positive cycles: ~96.6%
At $199.40:
- Sell put ≈ $179.5 (≈ $179–180)
- Buy put ≈ $169.5 (≈ $169–170)
Cash-secured puts (high income, higher crash risk)
Best “balanced” setting in the same grid:
- ~30D, 10% OTM (but with much larger tail losses than spreads in the model)
At $199.40:
- Sell put ≈ $179.5 (≈ $179–180)
My Thoughts
I’ll probably stick to covered calls on RSP as recommended. I’ll switch to cash secured puts on big drawdowns.
Share The Wealth
What would you do with RSP?