Existing SPY Position and Strategy Stephen Cox discussed the existing SPY position, noting that the strategy has a 99% chance of winning because it allows for profit in three different market directions, provided the price does not fall below a certain level. He clarified that this strategy works best with SPY due to the statistical data supporting its high probability of success, unlike individual equities which face greater risk, citing Meta as an example (00:11:21). Stephen Cox advised that it is best practice to close the SPY trade when it reaches 75% to 80% of the max profit, but since SPY is a high-probability trade, they could let it run a bit longer, aiming to take it off the table when profit reaches $375 to $400 (00:12:24).

Criteria for Re-applying SPY Trade Stephen Cox explained that the next time to consider applying another SPY trade is when the VIX (volatility index) spikes, specifically looking for a spike above 20 (00:13:33). Pat O'Brien asked if a second trade would be put on while the first one is still active; Stephen Cox indicated that this would be possible at the current 620 strike but not at 640, due to the low statistical probability of SPY reaching the lower strike (00:14:35). Stephen Cox further clarified that whether to put on a second trade depends on the account's allocation, suggesting that if an account is fully exposed, it would be better to close the first trade before opening the second one (00:15:32).

Rationale for Closing SPY Trade Before Expiry S G questioned why not let the SPY trade run to expiry given the 99% chance of success, suggesting it might be to free up capital (00:15:32). Stephen Cox confirmed that the primary rationale for closing the trade at 75-80% profit, rather than letting it run to expiry, is to free up capital for a new opportunity and potentially generate more premium, especially if a market wobble allows re-entry (00:16:40). He also noted that while there is nothing wrong with letting the SPY trade run to expiry from a risk perspective, this recommendation differs significantly for individual equities, where he would advise closing the trade at 40% or 50% profit to avoid potential downside (00:17:46).

Meta Stock Acquisition Rationale Stephen Cox announced plans to buy Meta for the long-term portfolio soon, noting the analysts' target price of 839 against the current price of 766, which they consider good value given Meta's current price of 609 (00:18:45). Stephen Cox explained that the market currently dislikes Meta’s capital expenditure (CapEx) spend and AI focus, which caused the recent decimation in the stock price. S G asked about the trigger for the purchase, and Stephen Cox clarified that they are waiting for a sign that the downtrend is over, specifically watching for the stock to not take out the recent low spike (00:19:47). Stephen Cox advised that while they do not see an issue with allocating the full 5% now, investors should be aware that Meta can sell off hard, citing a previous 35% drop as a possibility (00:21:36).

Crude Oil Trading Opportunities and Market View Stephen Cox shifted focus to crude oil, presenting it as the next trade opportunity, especially after a recent 4% drop due to OPEC's statement revising next year's supply and demand forecast to equilibrium. Stephen Cox noted that a ceasefire between Ukraine and Russia would likely bring Russian oil back to the market and drive prices down significantly, which they would use as a buying opportunity to go long on oil (00:22:28) (00:33:27). However, Stephen Cox believes that eventually, producers losing money will cut production, which will bring the price back to the $70 to $80 a barrel range (00:23:38).

Crude Oil Short Put Option Strategy Stephen Cox suggested that the safest way to trade crude oil currently is through a short put option on futures, given the series of lower lows and lower highs (00:23:38). For those with smaller accounts, he recommended the micro version (MCL) of the contract, which reduces the multiplier and the associated risk (00:24:39). Stephen Cox is waiting for crude oil to drop further, specifically to the $57 to $56 level, because the associated increase in volatility will raise premiums, making the trade more attractive (00:25:37) (00:33:27).

Alternative Methods for Trading Crude Oil Stephen Cox presented two alternatives for trading oil: using the USO Exchange Traded Fund (ETF) to trade options, which tracks oil futures and has a lower multiplier, potentially being safer for some traders (00:26:35) (00:32:24). Additionally, for those in the UK and Ireland, Stephen Cox highlighted that spread betting the option on IG Index is tax-free, although a key difference is that there is no assignment; the trader either wins or loses the bet (00:27:36) (00:31:38). He noted that while there is no overnight financing rate with the IG Index option trade, there is a significant difference between the sell and buy spread (00:29:42).