Selling SPY Put Spreads Above the EMA-200

A trend filter is a rule that says when not to sell. The 200-day exponential moving average (EMA-200) is the filter FIREDesk uses for SPY put spreads. This article explains how it works and, just as important, what it does not prove.

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.

What the EMA-200 is

An exponential moving average is an average of recent closing prices that gives more weight to the latest days. The EMA-200 looks back over roughly 200 daily closes. Each day it is updated with a simple formula: new EMA = close x k + previous EMA x (1 - k), where k = 2 / (200 + 1), about 0.0100. Because the weight is small, the line moves slowly. When SPY closes above it, the market is in a long-term uptrend by this definition; below it, it is not.

How FIREDesk uses it

The signal engine looks at the SPY close against three averages: 7-day, 30-day and 200-day EMA.

• BULLISH: SPY above all three. The signal uses an expiry of about 60 days.
• CAUTIOUS: SPY above the 200-day but below the 7-day or the 30-day average. The signal uses a longer expiry of about 120 days.
• NO TRADE: SPY below the 200-day. No signal is produced.

What our record can and cannot say

Every one of the 102 signals logged since 14 May 2026 was generated above the 200-day EMA: 53 as BULLISH and 49 as CAUTIOUS. There are no trades below the line, so the record contains no evidence about how the strategy would have done there. Anyone who quotes a win rate "with the filter versus without it" needs a dataset that includes trades below the line, and ours does not. We do not quote one.

What the record does show is that trades above the line still lose and still get stopped: 14 of 84 closed trades hit the stop. The filter changes when you sell, it does not make a trade safe. The split between the two states is covered in our backtesting article and the expiry side in the expiry article.

What a filter does and does not do

• Does: keeps you out of the market during extended downtrends, when a short put is tested again and again.
• Does not: predict a fall. The line lags, so SPY can drop a long way before it crosses, and it can cross back and forth around the line and give false starts.
• Does not: remove gap risk. A fast fall from above the line can reach your stop or your strike before any signal changes.

How to check it yourself

• Open a daily SPY chart and add an EMA with length 200.
• Look at the daily close, not the intraday price.
• Note how far above the line the close is, as a percentage. Close to the line means a small move can flip the filter.
• Decide your rule before you trade and apply it every time, including when it keeps you out.

For the full rule set see the complete SPY bull put spread strategy guide, and for how to size around the stop read the 1.5x stop loss.

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.