Because the broker only holds your Max Risk ($317) as margin, the percentage return is very efficient.

$83 (Profit) / $317 (Risk) = 26.18% return.

If you can repeat this every 42 days, you are outperforming almost every other traditional investment vehicle, all while having a 4% head start.

👨‍🏫 Mentor’s Insight: High Probability vs. High Payout

“Stephen here. Many new traders say, ‘Wait, I’m risking $317 to make $83? That seems lopsided!’

Here is the pro secret: You only take this trade because your Probability of Profit (PoP) is likely over 75%. If you buy or ‘short’ a stock, you have a 50/50 shot. In this spread, the stock can go down, stay flat, or even go up 4% and you still win. I’d rather have a 75% chance to make 26% than a 50/50 chance to make 10%. In our weekly 1-on-1 mentoring sessions, I’ll show you how to read the ‘Probability of Profit’ on your screen so you never guess. Want to see your win rate on a live trade? Book a Free Strategy Call today and we’ll run the numbers together.”

🛠️ Stephen’s Implementation Tip:

• The Strike Width Trade-off: The strike you sell ($700) determines your probability of winning. However, the strike you buy for protection (the $704 or $710) changes the “flavour” of the trade.

• Widening the Gap: If you widen the spread (e.g., $700/$710), you’ll collect a bigger paycheck (more credit), but your “Safety Net” is further away, meaning your Max Risk increases.

• The Bottom Line: Your win rate stays the same because the “ceiling” hasn’t moved, but the risk-to-reward dynamics shift. We call this “Adjusting the Payout”—you’re deciding if you want a smaller, safer paycheck or a larger, riskier one.