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Tackle Today: Cash Flow Expectation (CFE)

January 4, 2019

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≈ How much can you earn? ≈

If you are a cash flow trader, or a theta trader, you probably have spent some time calculating Return on Investment (ROI) percentages and potential returns.

In our Tackle Theta Spreadsheet that is a staple amongst active Tackle members, we use a concept called Cash Flow Expectation (CFE). CFE is essentially your potential ROI if the trade is held for a 30-day period. Our standard CFE is calculated over 30-day windows, because let’s face it, many traders build their systems to generate monthly returns.

When you are researching potential Covered Call returns, you should be aware that certain levels of CFE are expected when trading good Covered Calls. The ‘sweet spot’ is somewhere between 2-4%. Anything over 6% can indicate higher risk and require higher skill to manage. Anything lower than 2%, might be more conservative, but you may want to find better returns in other candidates.

Learn to assess CFE when using any strategy, and particularly the Covered Call. This month at Tackle Trading, we’ve released the Tackle 25 2019 edition with a few extra bonus lists. There’s also a great video system for you to learn from. Get in the game and build your Cash Flow.


Chart of the Day

COVERED CALLS BENEFITS

The picture above shows the five benefits of the Covered Call strategy. The Cash Flow Expectation (CFE) fits into the #4, “Create Cash Flow”. These benefits are explained in great details in our Tackle 25 2019 Edition, available for Pro Members as well as a standalone Premium System here.


Video of the Day

What is Theta? (BONUS: FREE Options Greeks Guide)

In this video, you will learn what the Options Greek THETA is and how it can be used in your trading routine in order to perform better in the market.


Today’s Lineup

Traders Lounge 11am EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

JOIN US HERE

Cashflow Club Replay

If you missed last night’s episode where Coach Hiro talked about Naked Puts on Commodities or would like to watch it again, check it out here.

Watch Replay

Halftime Report 12:30pm EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.

JOIN US HERE

Market Recap 4:30pm EST

The Market Recap is designed to give you a quick overview of the day that was. While brief, this report is designed to cover all of the major events that drove the markets that day and help you plan for the trading day ahead.

JOIN US HERE

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