There is a little known strategy that has been a consistent money maker since May 2022 and that has been selling low delta puts on /mes.
One of the main issues with selling options on a small account is dealing with the buying power required; if you want to sell a put on SPY at 400 you would need 40k to maybe earn a few hundred $.Selling a credit spread costs the width of the spread, in a 5 width spread you would use $500 in buying power to maybe earn $25-$50 for a 30 dte. If you were able to trade using portfolio margin naked puts would use less buying power, but you would need at least 100k to trade this way. Futures are a way to use span margin which is similar to portfolio margin but can trade on a small account of a few thousand dollars.
The futures contracts I have been trading are on the equivalent of SPY which is /mes and /es. These are highly leveraged products so be aware of the risks involved. I advise that you review the cme futures website at https://www.cmegroup.com/ prior to trading futures.
I tend to sell between .03-.05 delta puts close to 30 days out on /mes. Currently I’m able to get 3% a month on a .05 delta naked put.
Here is what I sold Sunday 5/07. I took in 16 in total premium with a 5x multiplier making $80 on 39 DTE using about $900 in BP and leaving $900 in cash with a 80/1800= 4.4% return off a .05 delta
Here is how I have been managing my funds using these trades.
Whatever the buying power needed for selling a futures put leave AT LEAST the same the buying power required in CASH AND DONT TRADE IT. For the /mes example the buying power used is $418.25, leave another $418.25 in cash to deal with span margin if the trade goes against you.
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