Put Credit Spread Example on SPY, Step by Step

This walkthrough follows one real signal from our log from choosing the expiry to the exit rules. It is educational: broker screens differ and you decide your own size. The numbers are paper-trading numbers, explained below.

How to read the FIREDesk numbers in this article. They come from our paper-trading record (14 May to 9 Oct 2026): no real capital was used, option prices are estimated by a model rather than taken from real fills, and 13 of the 102 logged signals use credits calibrated from historical data. The model has no sudden jumps in volatility, so real fills and real stops would be less favourable. On 12 October 2026 we also fixed a calculation error that had recorded stop-losses the market prices did not justify; the figures here are the corrected ones. It is a short, early record and it is not a forecast. Full detail is on the performance page.

Step 1: Check what you need

• A broker account approved for defined-risk spreads (usually "Level 2" or "spreads").
• Enough capital to cover the maximum loss of the position, not only the credit.
• A plan for exits before you enter.

Step 2: Pick the expiry

FIREDesk signals use expiries of about 60 days in a clearly rising market and about 120 days when SPY is above its 200-day average but below a shorter one. The example below is a 120-day trade: it expires 29 January 2027, opened on 1 October 2026.

Step 3: Pick the strikes

With SPY at about 763.67, the signal sells the 695 put and buys the 685 put, a $10-wide spread. The short strike is about 9% below the price and its delta is about 0.09. See delta and strike selection for how to choose.

Step 4: Place the order

In your broker, choose a vertical spread: sell to open the 695 put, buy to open the 685 put, same expiry, as a single order with a net credit. Use a limit order at or near the mid price. The logged credit is $1.23 per share.

• Credit: $1.23 x 100 = $123 per contract, $492 for 4 contracts.
• Maximum loss: (10 - 1.23) x 100 = $877 per contract, $3,508 for 4 contracts.
• Break-even at expiry: 695 - 1.23 = 693.77.

Step 5: Set the exits

The signal carries two prices. The take profit is $0.615, half of the credit: buy the spread back at that price and keep the difference. The stop is $1.845, 1.5 times the credit: if the spread costs that much, close it and accept a loss of about half the credit. Learn how these interact in the 50% take-profit rule and the 1.5x stop loss.

Step 6: Manage the position

• Check the spread price against both targets. Orders resting at those prices save you watching.
• SPY options are American style: the short put can be assigned early. Closing before expiry avoids it. See assignment risk explained.
• Do not add to a losing position to recover it.

How examples from the log ended

On 4 August 2026 the 710/700 spread opened at a $0.79 credit and reached its target on 3 September for +$169.60 on paper. On 4 September the 725/715 spread opened at $0.72 and reached its target on 5 October for +$144 on paper. On 15 June 2026 the 705/695 spread opened at a $0.84 credit, hit its stop on 23 June 2026 and lost $168 on paper. The 1 October trade above is still open. Across all 84 closed trades, 70 hit the target and 14 hit the stop. These results are paper trading with model prices and are not a forecast.

For the whole system including the trend filter, read the complete SPY bull put spread strategy guide.

Educational content, not financial advice. Options trading involves significant risk of loss, including the loss of the whole amount at risk on a trade. Past and simulated results do not guarantee future performance.