Decision Trees
Companion Document to the Master Reference Summary
Diamonds Trading
If This, Then That
Ten decision trees plus a Premium Dynamics reference panel — use these in real time while the market is open
10Decision Trees
3Departments
30/30Min Daily Routine
∞Scenarios Covered
TREE 1
The Morning Routine — First 30 Minutes
Run this every morning before placing any trades
1
Read ALL of Alex's emails — twice
First pass: get the big picture. What is Alex doing today and why? Second pass: identify every specific trade with a strike, expiration, and credit target.
⚠️ Do not place any trades before completing both reads
2
Check: Does anything expire TODAY?
- Short put expiring today → Flag for 3:30pm roll. Do NOT roll in the morning.
- Short call / IC expiring today → Check if GTC close already triggered. If not, flag for 3:30pm management.
- Long put within 30 DTE → Plan roll soon. Protect BP this week.
3
Check Portfolio Delta
If Delta
Within ±150
→
Then
✅ Balanced. Proceed normally. Theta is working.
If Delta
±150 to ±300
→
Then
⚠️ Monitor. Note it. Watch for opportunity to rebalance through today's roll.
If Delta
±300 to ±500
→
Then
⚠️ Caution. Today's roll should aim to move delta back toward neutral.
If Delta
Beyond ±500
→
Then
🚨 Act today. See Tree 6 — Emergency Protocol. Rebalancing is today's primary goal.
PRIORITY
4
Check Buying Power Usage
If BP Used
Under 70%
→
Then
✅ Good runway. Can add trades if edge exists. Proceed normally.
If BP Used
70% – 80%
→
Then
⚠️ Sweet spot. Add only if today's roll will bring credits in to restore it.
If BP Used
Over 80%
→
Then
🚨 Too aggressive. Do NOT add new trades today. Focus on rolls to bring credits in.
STOP
5
Check: Is this a Daily Diamond CCS or PCS?
If Alex gave
Opening credit AND closing debit target
→
Then
📥 INCOME TRADE by default. Place it. Place GTC close at .65 db immediately after fill — no instruction from Alex required. Alex will issue instructions only if it is to be treated as a hedge.
GTC .65 db — AUTOMATIC
If Alex gave
Opening credit only — no close target
→
Then
🛡️ HEDGE. Place it. No GTC close. Wait for Alex's management instructions.
NO GTC CLOSE
6
Check: Has an ATH, 3-ATR, or 4.5%-above-50MA trigger fired today?
If any
GI trigger has fired
→
Then
Add ONE Gap Insurance contract today. Non-negotiable. See Tree 5 for details.
REQUIRED
If no
GI trigger has fired
→
Then
✅ No GI needed today. Continue to step 7.
7
Set your 3:30pm reminder — then step away
You have done what is needed. All GTC orders are placed. All morning flags are noted. The market will do what it does — your theta is earning whether you watch it or not.
✅ Morning routine complete. Next action: 3:30pm roll execution.
The One Rule About Watching the Screen
If the market moves 80+ points intraday, begin monitoring. If it moves 120+ points, active management may be needed. Under 80 points — close the screen and go live your life. That is not avoidance. That is discipline.
The "Do Nothing Day" — A Skill, Not a Failure
Some days the right answer is zero trades. "Days like these can be dangerous — you've had great gains and feel invincible, and that's when the market puts you in check really quick." If there is no clear edge, no positions to manage, and the market could go 80 points either direction — do not force a trade. "Do nothing. Go about your day. Don't force trades. Abide by the mantra." The four priorities in order: (1) Preserve capital, (2) Preserve gains, (3) Reduce risk, (4) Maximize gains. Levels 1–3 always come before level 4.
TREE 2
The Roll Decision — Which Direction and Why
Use at 3:30pm when rolling expiring short puts
The Anchor Rule — Always Start Here
99% of the time Alex is touching that day's expiration contract. Find your position that matches the EXPIRATION DATE first. The strike is secondary. Whatever you have expiring today — that is what you are rolling.
Step 1 — Determine Your Current Delta Posture
🔴 Heavy Short Delta (Beyond -300)
Your account is leaning too bearish. The portfolio profits too much when the market falls and struggles too much when it rises.
→ You need to ADD long delta through your roll. Roll UP or roll with put spreads to rebalance.
🔵 Neutral Delta (Within ±150)
Your account is well balanced. Theta is your primary income. Daily market moves don't dramatically swing your P&L.
→ Roll based on market conditions and Alex's guidance. Usually FLAT or slight adjustment.
🟢 Long Delta (Beyond +200)
Your account is leaning too bullish. The portfolio profits too much when the market rises and struggles too much when it falls.
→ You need to REDUCE long delta. Roll DOWN or add short calls to rebalance.
🟡 Extreme Short Delta (Beyond -500)
This is a red flag situation. The portfolio is dangerously directional. On a strong up day this can cause significant P&L swings.
→ Rolling UP is mandatory. Also see Tree 6 — Emergency Protocol.
Step 2 — Factor in Market Conditions + Choose Your Roll Direction
Market Condition + Delta
Market rallying AND short delta heavy
→
Roll Direction
Roll UP aggressively. Higher strike = more premium collected + adds long delta to rebalance the portfolio. Double win. This is Alex's favorite move on a strong up day when heavily short delta.
ROLL UP
Market Condition + Delta
Market rallying AND delta is neutral
→
Roll Direction
Roll FLAT. Same strike, new expiration. Collect premium, stay balanced. No need to reach for more delta in either direction.
ROLL FLAT
Market Condition + Delta
Market weak/falling AND delta is neutral
→
Roll Direction
Roll DOWN slightly. Lower strike adds safety cushion. Accept slightly less premium in exchange for more protection. Being cautious is smart when market is weak.
ROLL DOWN
Market Condition + Delta
Market weak/falling AND short delta heavy
→
Roll Direction
Roll FLAT. Don't go down further — you already have enough short delta. Flat preserves cushion without adding more bearish exposure.
ROLL FLAT
Market Condition + Delta
Market at ATH, cautious tone
→
Roll Direction
Roll FLAT or slightly DOWN. Don't chase the ATH with more long delta. Be patient. Add GI if the ATH rule fires. Protection first, income second at all-time highs.
ROLL FLAT / DOWN
Market Condition + Delta
Big down day (100+ pts) — "gift day"
→
Roll Direction
Roll UP aggressively. Elevated premiums from fear. GI is protecting you. This is exactly when to be bold. Alex's phrase: "Love this drop." Collect maximum credit while you can.
ROLL UP — BE BOLD
Step 3 — What About the Long Put?
If Long Put
Has 30+ DTE remaining
→
Then
Leave it alone today. Only touch the short put roll. The long put is still doing its job.
LEAVE IT
If Long Put
Is within 30 DTE
→
Then
Plan the roll this week. This is a net debit purchase — make sure BP is available. Follow Alex's specific instructions for rolling the long.
PLAN NOW
If Long Put
Is very far OTM (market moved way up)
→
Then
Opportunistically roll it UP in strike while it is cheap. Alex does this when the market rips higher and OTM long puts can be upgraded for minimal cost.
OPPORTUNISTIC ROLL
Remember: No Long Put Belongs to Any Short Put
Long puts and short puts are independent inventory. You can roll the short without touching the long. You can upgrade the long without touching the short. They are managed separately based on their own needs.
TREE 3
Income or Hedge? — Every Vertical Spread Classified
Run this decision every time Alex posts a call spread, put spread, or iron condor
The Single Most Important Question
Did Alex include a specific closing debit price in the same message as the opening trade? That one question determines everything that follows.
The Classification Test
Signal 1
Daily Diamond CCS or PCS — no special instruction needed
→
Classification
📥 INCOME TRADE — default for all Daily Diamond CCS and PCS. Place it. Place GTC close at .65 db immediately after fill — no instruction from Alex required. Alex will issue specific instructions only when a trade is to be treated as a hedge instead.
INCOME — GTC .65 db AUTOMATIC
Signal 2
Alex mentioned delta, portfolio balance, protection, or "I will not take less than X" — no close target
→
Classification
🛡️ HEDGE. Place it if appropriate for your account. No GTC close. This position is held and managed — either rolled if threatened or left to expire worthless.
HEDGE — NO GTC
Signal 3
Alex says it is specifically for delta management or BP reasons specific to his account size
→
Classification
⚠️ EVALUATE FIRST. Alex sometimes flags trades that only make sense if YOUR delta is also skewed. Check your own delta before placing. If your delta is balanced, this trade may not be right for you today.
CHECK YOUR DELTA
What Happens Next — The Two Paths
📥 Path A — Income Trade Works as Planned
The market stays within range. Time passes. The spread decays toward zero.
- GTC close triggers automatically at your target
- You collect 50–65% of maximum possible profit
- Position closes — done
- No further management needed
Result: "Win a little" — clean income collected efficiently
⚡ Path B — Income Trade Gets Breached
The market moves through your sold strike. The GTC close doesn't trigger.
- The trade is now under pressure
- Your MPs are likely profiting from the same move
- Cancel the GTC close order
- Wait for Alex's roll instructions
- Roll further out in time, up in strike for credit
Result: "Win a lot" — MPs profit, trade converts to free hedge
The GTC Close Order — Getting It Right
1
Wait for confirmation that your OPENING order has filled
Do not place the GTC close until you have a fill confirmation on the opening trade. Placing a close on an unfilled opening order creates problems.
2
Immediately place the GTC close at .65 db
The close is a BTC (Buy to Close) order at .65 db. Set it as GTC so it stays open until filled. Do not use a day order — it needs to be able to fill on future days too. For Daily Diamond CCS and PCS this is always .65 db — no need to wait for Alex to specify it.
3
Step away — the GTC order works on its own
Once placed, the GTC order will trigger automatically. This is the core benefit — systematic execution without needing to watch the screen.
✅ If Alex posts a new instruction for this specific position later, cancel the GTC and follow the new instruction
The Most Common and Costly Error
Placing a Daily Diamond CCS or PCS and then forgetting to place the GTC close at .65 db immediately after fill. Every Daily Diamond CCS and PCS is an income trade by default — the .65 db GTC close goes on automatically with every fill, without waiting for Alex to say so. Alex will issue specific instructions only when a trade is to be treated as a hedge instead.
The 50-Cent Rule — When You Miss the Morning Trade
If Credit
Within 50 cents of Alex's stated credit
→
Action
You can still enter — but do NOT put on the full lot size. Enter at 40–50% of your normal size. If the price recovers back toward Alex's original credit, add the remaining 50–60% at the better price.
HALF SIZE ENTRY
If Credit
More than 50 cents below Alex's stated credit
→
Action
The trade has already moved. Skip it entirely or wait for a better entry. The risk/reward at this point is no longer favorable. Do not chase.
SKIP
If Price
Keeps dropping after your half-size entry (e.g. to $1.30)
→
Action
Do not add more size. Accept the partial position at the price you got. The move has happened and adding at a worse price compounds the risk without improving the credit profile.
HOLD — DON'T ADD
Alex's Rule of Thumb
"Stay within 50 cents of my price. If you're within that window but the price has dropped — get in at half size. Let it recover, then add the rest. Don't put your whole risk on a trade that's already moved 50 cents against your entry."
Iron Condor — One Close vs. Split Close
Default
Market is calm, normal daily range
→
Close As
One 4-leg order. Put the IC on together, take it off together. One GTC close order covering all four legs at the combined debit target.
4-LEG CLOSE
High Volatility
Large intraday swings (80–100+ points), market reversing sharply
→
Close As
Two separate GTC close orders — one for the call side, one for the put side. On a big swing day, one side may hit 70% profit while the other hasn't moved. Close the winning side immediately to remove that risk. Manage the remaining side independently. Can result in a double exit on the same day.
SPLIT CLOSE
TREE 4
Breach Management — A Position Has Gone ITM
Stay calm. A breach is not a loss. It is a change of role.
First: Breathe. A Breach Is Not an Emergency.
A breached income trade simply means the market moved more than expected. The position is not a loss until you close it at a loss. Alex's system is designed specifically for this moment. Follow the tree below.
Step 1 — Identify What Got Breached
Short CALL spread breached (market rallied)
Your short call strike is now ITM. The spread is losing value.
→ Your short PUTS (MPs) are likely at or near max profit right now. The rally that hurt the calls is making the puts very profitable. Net portfolio is likely still positive.
Short PUT spread breached (market dropped)
Your short put strike is now ITM. The spread is losing value.
→ Your GAP Insurance and short calls are gaining value. These were placed exactly for this scenario. Check their current value before panicking.
MP short put breached (market dropped hard)
Your weekly short put is ITM. This is the most serious scenario.
→ This requires rolling, not panicking. GI should be gaining value. See Step 3 below for MP-specific protocol.
Iron Condor — one side breached
Either the call side or put side of the IC has been threatened.
→ Cancel the existing GTC close order on that side. Wait for Alex's specific roll instructions. Do not close the unthreatened side.
Step 2 — Short Call Spread Breach Protocol
1
Cancel the existing GTC close order
The GTC close was set to trigger at profit. That is no longer relevant. Cancel it now before it creates confusion.
2
Do NOT close the position at a loss immediately
This is the most important step. Closing at a loss locks in the loss permanently. The position still has time and can be managed. Wait for Alex's instructions — or if acting independently, follow step 3.
3
Roll further out in time AND up in strike for net credit
Buy back the breached call spread. Sell a new call spread at a higher strike and/or later expiration for a net credit. The goal is to collect enough credit on the new position to offset the debit on closing the old one.
The rolled position is now a HEDGE — no GTC close on the new position
4
Recognize what just happened
You paid to enter the original position (received credit), you collected credit again on the roll, and now you have a short call hedge sitting out in time providing ongoing short delta protection. You got paid twice. The breach did not cost you anything out of pocket.
Step 3 — MP Short Put Breach Protocol (Market Dropped Hard)
1
Check GI and short call positions immediately
A large market drop means your Gap Insurance has gained significant value and your short calls are gaining value from delta. What looks like a loss on the MP is likely being offset elsewhere in the portfolio right now.
2
Wait for Alex's specific roll instructions
Alex will provide exact strike and expiration guidance. Do not freelance a roll on the MP without his guidance — the strike choice matters for the overall portfolio delta picture.
3
Roll the short put further out in time for credit
Alex will typically roll down slightly in strike on a big down day — more premium available and more safety cushion. The key is collecting credit on the roll, not taking a cash loss.
In a true emergency drop: GI can be brought from far expiration to near expiration to maximize its value and offset MP losses
What NOT to Do When Something Is Breached
Do not panic close. Do not add new trades without understanding the portfolio delta impact. Do not watch the screen obsessively. Do not check P&L every five minutes. The system is designed for exactly this moment. Trust the structure, follow the protocol, wait for Alex if unsure.
TREE 5
Gap Insurance — When, How Much, and What Kind
The three rules are non-negotiable — this tree tells you exactly what to do when they fire
The Three GI Trigger Rules — Check Daily
Rule 1
Market hits an ALL-TIME HIGH today
→
Action
Add ONE GI contract today. This is non-negotiable. The exact structure follows below.
TRIGGERED
Rule 2
Market hits 3 ATR on the HOURLY or DAILY chart
→
Action
Add ONE GI contract today. Market is extended — buying insurance at the right moment.
TRIGGERED
Rule 3
Market is more than 4.5% ABOVE the 50-day moving average
→
Action
Add ONE GI contract today. Historically elevated — insurance is warranted.
TRIGGERED
Rule 4
Market rides the 2 ATR band for 4–5 consecutive days
→
Action
Add ONE GI contract. Even if ATH, 3-ATR, and 4.5% rules haven't technically fired, sustained riding of the 2 ATR for multiple days signals overextension within the spirit of the GI rules. "After the fourth or fifth day, I might throw in another gap insurance just because it is hitting the overextension parameter of the spirit of the trade."
TRIGGERED
All rules fire
Multiple rules trigger ON THE SAME DAY
→
Action
Still add only ONE GI contract. Multiple triggers on the same day do not multiply the requirement. Add one and move on.
STILL JUST ONE
Rules fire
On consecutive days (e.g., ATH Monday, 3-ATR Tuesday)
→
Action
Add one GI on each day a rule fires. Consecutive-day triggers = consecutive-day additions. Build up slowly over time.
ONE PER DAY
No rules
No triggers have fired today
→
Action
✅ No GI addition needed today. Do not buy insurance unnecessarily — wait for the right moment. Buying at the wrong time is costly.
WAIT
GI Structure — What to Buy
Source of Funds GI (Far Out in Time)
When: Market at or near ATH. Low volatility. Insurance is cheapest.
Structure: Bear put spread 4–6 months out. Buy put at current support level, sell put 100 points lower.
Cost: Very low — far OTM, far in time. Delta is tiny.
Purpose: Sit and accumulate. Roll forward later for credit when needed.
→ This is the "plant seeds now, harvest later" GI
High Gamma GI (Closer in Time)
When: Market showing weakness. Bearish signals developing. You want more responsive protection.
Structure: Bear put spread 30–60 days out. Higher delta, more responsive.
Cost: Higher than Source of Funds but more powerful near-term.
Purpose: More direct protection against a near-term correction.
→ This is the "active protection mode" GI
How Much GI Is Enough? — The Two Phases
1
Phase 1 — Cover the MP Gap
Calculate your total MP exposure: (number of contracts) × (width between short and long put strikes in dollars). Example: 40 contracts × $50 wide = $200,000 exposure. Your GI + short call value should approach this number.
Until Phase 1 is achieved, Alex compensates by running more short calls as supplemental protection
2
Phase 2 — Cover the Entire Portfolio
Advanced stage. GI notional value exceeds your total MP exposure. A catastrophic correction would make the portfolio whole and possibly profitable. Alex achieved 1.5x portfolio coverage in a prior run — at that level a crash is actually a windfall.
Managing Existing GI
If GI
Is within 30 DTE
→
Action
Roll forward 3–6 months, same structure. This is routine maintenance — like renewing your homeowner's insurance before it lapses.
ROLL FORWARD
If GI
Is far out in time and a correction hits now
→
Action
Roll it FORWARD to current month. This activates the protection fully. Far-dated GI moving close to expiration dramatically increases its delta and value in the correction.
BRING IT FORWARD
If GI
Has gained significant value on a big down day
→
Action
Consider closing 50% for profit and using those credits to fund new MPs at better prices. Alex did this Jan 12. Take profits, redeploy capital.
TAKE PROFITS
The Mindset About GI Losses
"I would love nothing more than to 100% lose the entire cost of this GI." — Alex. If GI expires worthless, that means the market kept going higher and all the MPs paid well. The GI loss was funded many times over by MP income. Losing on GI is not a failure — it is proof the system worked.
TREE 6
Emergency Protocol — When the Portfolio is Out of Control
For extreme delta, extreme BP usage, or extreme market moves
First Rule of Emergency Protocol
Do NOT make emotional decisions. Do NOT panic close positions. Read Alex's latest emails first. Then assess the three pillars in order: BP, Delta, then Theta. Fix them in that order.
Emergency 1 — Buying Power Too High (Over 85% Used)
1
Stop adding any new trades immediately
No new MPs, no new income trades, no new hedges. Not until BP is restored. Every new trade consumes more BP and makes the situation worse.
2
Identify what is consuming the most BP
Is it the long puts? The GI positions? Wide spreads? Identifying the largest BP consumers tells you where to focus. Often it is long puts that have drifted far OTM and are consuming BP without providing useful protection.
3
Execute today's rolls — they bring credit in
Rolling short puts brings premium into the account. This increases cash and helps restore BP. This week's scheduled rolls should help. Do not skip them thinking you'll "wait for better conditions."
4
If BP still too high — narrow spreads or close long puts early
Alex sometimes closes long puts that are very far OTM to recover BP, accepting reduced protection temporarily. On PM accounts, adding short calls can actually ADD BP rather than consume it — this is the PM superpower.
Wait for Alex's specific guidance before making significant BP recovery trades
Emergency 2 — Delta Beyond ±500
1
Determine which direction and how far
Is it heavy SHORT delta (deeply negative — portfolio too bearish)? Or heavy LONG delta (deeply positive — portfolio too bullish)? The fix is different for each direction.
2
Heavy SHORT delta — too bearish
- Roll today's expiring short puts UP in strike aggressively (adds long delta + premium)
- Add short put verticals — these are short puts = long delta (Jan 22 example)
- Close some short call positions if appropriate
- Do NOT add more short calls today
3
Heavy LONG delta — too bullish
- Add short call spreads above the market (adds short delta)
- Roll today's expiring short puts DOWN in strike (less long delta)
- Close some long puts if they are too far ITM
- On PM accounts, short calls can rebalance delta at essentially no BP cost
Emergency 3 — Market Moves 150+ Points in a Day
Market
Down 150+ points (big red day)
→
Response
This is a gift. GI is gaining value. Short calls are gaining value. Premium on new trades is elevated. Check your GI value. Roll any expiring puts DOWN for large credit. Opportunistically add new MPs at great prices. Alex's phrase: "Love this drop."
OPPORTUNITY
Market
Up 150+ points (big green day)
→
Response
MPs are highly profitable — many short puts near zero. Check if any short calls are threatened. Roll any threatening call positions further up and out. Collect extra premium on rolls. Check if an ATH was hit — if so, add GI.
MANAGE CALLS
Market
Down 300+ points (black swan territory)
→
Response
Read Alex's emails immediately. GI should be providing major protection. Short calls near max profit. Consider bringing far-dated GI forward to current month for maximum delta exposure. Alex's system was designed specifically for this day.
FOLLOW ALEX
Remember the Structure in Any Emergency
Alex's target in a 1,000-point crash: net loss of only ~$20,000 on a $500k account. That is the entire point of all the layering — GI, short calls, staggered MPs, multiple expirations. In a true emergency the system is not failing. It is working exactly as designed. Trust the structure.
TREE 7
New Member Onboarding — Your First Trades, Step by Step
Start here if you haven't placed your first trade yet, or if you're switching brokers
Before You Place Any Trade
Watch the training videos at least once. Read the Master Reference Summary. Understand the Three-Department Framework and the Three-Legged Stool concept. You don't need to understand everything perfectly — but you need the basic mental model before your first trade.
Step 1 — Get the Right Broker and Account Type
Account
Under $15,000
→
Recommendation
Start with SPY at any broker. Be aware of assignment risk. Work toward XSP as your account grows.
SPY FOR NOW
Account
$15,000+ (including IRA)
→
Recommendation
Open at Tastytrade. Trade XSP. European style — zero assignment risk. Works in IRA. This is the recommended setup for this system.
TASTYTRADE + XSP
Account
Large account, active trader
→
Recommendation
Apply for Portfolio Margin at Tastytrade. This unlocks the BP superpower where short calls can add rather than consume BP. Discuss requirements with Tastytrade directly.
PORTFOLIO MARGIN
Step 2 — Your Very First Money Press
1
Watch Alex's emails — start when he starts
The signal to open your first MP is seeing Alex start a new one in his email. "When you see me starting one — that's when you put one on. That means I'm comfortable having that long delta exposure at whatever strike I choose. Whatever strike I choose — that's the strike for you."
2
Your safe first entry in the current market
The month-end far-out iron condor (wide strikes, ~200-point put cushion, ~70 points premium) is the recommended first trade for brand-new members. "It's safe enough, enough cushion — you can start getting time decay and get your feet wet with order entry."
⚠️ Do NOT put on the weekly or 2-day condors yet — those exist to protect and hedge MPs. Without MPs they have no anchor.
3
Long put starting leg
Use the furthest-out, highest-strike long currently in Alex's Current Trades tab. If starting from scratch, May 29 @6800 (or equivalent) is your first long leg. This is your protective inventory.
4
Starting without Gap Insurance? Use a flat MP
Sell the short put and buy the long put at the same strike, different dates. This eliminates the gap that GI normally covers and removes most downside exposure while you build the foundation.
Example: Sell 6850 short (near-dated) / Buy 6850 long (May). Same strike = no gap = no GI needed yet. You give up some premium but dramatically reduce risk.
5
Size by instrument and account
SPX ($200k+ AND Portfolio Margin required): Maximum 5 contracts to start.
XSP (under $200k): Maximum 5 contracts to start.
Always keep 30% BP in reserve. Alex trades a 7-figure account — scale everything to your account, not his numbers.
XSP (under $200k): Maximum 5 contracts to start.
Always keep 30% BP in reserve. Alex trades a 7-figure account — scale everything to your account, not his numbers.
6
Do NOT add GI, short calls, or daily spreads yet
GI has its own trigger rules — never buy it in a choppy or declining market. Daily diamond credit spreads only make sense once MPs are running. The only exception is the month-end far-out IC in Step 2.
Step 3 — Building Over Time
After
First MP is running and you understand the roll process
→
Next Step
Add a second MP set at a different expiration date. Build toward one per weekday (Mon–Fri). Add one at a time — never rush.
ADD MP #2
After
3+ MPs running, comfortable with rolling, BP managed well
→
Next Step
Begin following Alex's Daily Diamond income trades (CCS and PCS). Every fill gets a GTC close at .65 db immediately — no instruction from Alex needed. Get comfortable with the income trade process.
ADD INCOME TRADES
After
5 MPs running, income trades familiar, GI rules understood
→
Next Step
Begin adding Gap Insurance when the three rules fire. This is Phase 1 completion — building toward coverage of your total MP gap exposure.
ADD GI
After
System fully running, GI in place, BP well managed
→
Next Step
Follow Alex's short call hedges for delta management. Consider LEAP strategy when appropriate. You are now running the full three-department system.
FULL SYSTEM
How to Follow Alex When Your Strikes Are Different
1
Track by expiration date, not by strike
When Alex rolls, he always anchors to the expiration date. "I am touching today's expiration." Find your position that matches that date. The strike may differ — that is fine.
2
Record SPX level at your entry for each trade
If Alex entered at 6950 when SPX was at 6960, and you entered at 6880 when SPX was at 6890, you both entered 10 points OTM. Knowing the SPX level at your entry tells you whether you entered in-the-money, at-the-money, or out-of-the-money relative to Alex's trade.
3
When in doubt about a specific trade — understand the spirit first
Ask: Is this an income trade (GTC close needed)? Or a hedge (no GTC close)? Is Alex doing this because of a delta problem specific to his account? Understanding the purpose tells you whether it applies to your situation.
The Master Reference Summary has all the context needed to understand the "why" behind every trade type
Final Reminder for New Members
You have more than 10 months remaining in this program. It is not everything or nothing. You can do fewer money presses. You can skip an income trade when you are busy. You can ease into it. What matters is that you understand the concepts deeply — the trades will follow naturally. Think of months 1–3 as your educational period. The returns will compound as your understanding compounds.
TREE 8
Position Sizing — Every Credit Spread and IC
Run this before placing any daily diamond trade. Size correctly or don't place it.
The Most Common Expensive Mistake in Diamonds
Taking on too much size on daily diamond credit spreads and iron condors. These trades have a ~6:1 risk/reward ratio as standalones. Without the MP premium to offset them, a max loss is devastating. Calculate your risk BEFORE every entry — not after.
Step 1 — Calculate Your Risk Per Contract
1
Find the spread width
Subtract the bought strike from the sold strike. A 6800/6785 put spread = 15-point spread = $1,500 gross risk per contract.
2
Subtract your credit received
$1,500 spread − $225 credit = $1,275 net risk per contract. This is the number that matters. Multiply by your contract count to get total risk exposure.
3
Compare risk to your accumulated MP premium
Your daily diamond risk should not exceed your accumulated MP premium. If you have $60,000 sitting in MP premium, a $10,000 IC loss still leaves you net +$50,000 for the week. If you have $60,000 in MP premium and take on $80,000 in daily diamond risk — the math no longer works.
Rule: Total daily diamond risk ≤ accumulated MP premium. Never the reverse.
Step 2 — Determine Your Lot Size (Alex's Framework)
Alex puts on
5 contracts
→
Quarter Lot
Testing the waters. New idea, uncertain direction. Minimum footprint. Scale your equivalent to 25% of your normal size.
QUARTER SIZE
Alex puts on
10 contracts
→
Half Lot — Default Entry
Alex's standard entry size. "75–90% of the time I go in at a half lot to start." This is NOT a small position — it is his default. Scale your equivalent to 50% of your normal size.
HALF SIZE
Alex puts on
20 contracts
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Full Lot — 100% Committed
High conviction. Often built by adding to a half lot after price confirms. Scale your equivalent to 100% of your normal size.
FULL SIZE
Scale to YOUR Account — Not Alex's
Alex trades a seven-figure account. If you have $200,000 and Alex puts on 10 contracts, your equivalent might be 2 contracts. There is no shame in 1 or 2 contracts. When one of these goes to max loss, you will be deeply grateful you sized correctly.
Step 3 — Iron Condor Risk Math
IC vs Single Side
Same margin requirement either way
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Double Credit Advantage
An IC has the same $1,275 margin requirement as a single put spread (because both sides can never simultaneously lose). But you collect TWO credits. Net risk = spread width − TOTAL credits from both sides. A 15-pt IC with $4.50 total credit = $1,050 net risk per contract vs. $1,275 for a single side.
One side breached
Market blows through one spread
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True Max Loss
Lose ~$1,275 on the breached side. Keep the credit from the other side (~$225). Net loss: ~$1,050. Still a loss — but MPs profiting from the same move offset it within the portfolio.
MANAGE — SEE TREE 4
Step 4 — The Risk/Reward Reality Check
Why These Trades Have a Bad Standalone Risk/Reward — And Why That's Fine
A single put credit spread risking $1,275 to make $225 is a 6:1 risk/reward. That means six consecutive wins are needed to recover one max loss — as a standalone trade.
But within the Diamonds system, these are never standalone. They exist to generate theta, manage delta, and complement the MPs. When the trade loses, the MPs win. When the MPs are under pressure, the daily diamonds may be at max profit. The portfolio sees a completely different risk profile than any individual trade.
"I'm perfectly okay putting on trades I purposely want to lose 100% of the credit on — because if I do, I'm winning a lot on the other side. That was the whole reason the trade was put on." — Alex
But within the Diamonds system, these are never standalone. They exist to generate theta, manage delta, and complement the MPs. When the trade loses, the MPs win. When the MPs are under pressure, the daily diamonds may be at max profit. The portfolio sees a completely different risk profile than any individual trade.
"I'm perfectly okay putting on trades I purposely want to lose 100% of the credit on — because if I do, I'm winning a lot on the other side. That was the whole reason the trade was put on." — Alex
TREE 9
Money Press Entry — When, How, and What Size
The core revenue engine of the entire system — use this tree every time Alex starts a new MP
What the Money Press Is
The Money Press is the heart of the Diamonds system — a bullish-to-neutral income engine built from short puts (weekly income) and long puts (rolling protection). Every other component — daily diamonds, GI, short calls, LEAPs — exists to support, protect, or enhance the MP. It generates theta income 24/7 and is the primary reason the system works.
Step 1 — Is Now the Right Time to Add a New MP?
Signal
Alex's email shows him opening a new MP set
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✅ Your Signal to Enter
"When you see me starting one — that's when you put one on. That means I'm comfortable having that long delta exposure at whatever strike I choose. Whatever strike I choose — that's the strike for you." Match Alex's strike. Scale your size to your account.
ENTER NOW
Signal
Alex is rolling existing MPs but not adding new ones
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Roll Only — Do Not Add
Alex is in maintenance mode on MPs. Roll your own expiring short puts per his roll instructions. Do not open new MP sets unless he explicitly starts a new one.
ROLL ONLY
Signal
Alex has reduced MP exposure significantly (defensive mode)
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Do Not Add — Follow His Lead
Alex reduces MPs when market conditions are choppy or downtrending. The MP is bullish-to-neutral — it underperforms in a sustained downtrend. Match his defensive posture. Daily diamonds fill the income gap in the interim.
WAIT
BP Check
Below 25% buying power available
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🚨 Stop — Restore BP First
No new MPs if BP is critically low. Adding a new MP consumes significant BP. Bring BP back above 30% through roll credits before adding any new position.
FIX BP FIRST
Step 2 — Choose Your MP Structure
Situation
GI already in place, market conditions normal
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Normal Structure
Short put and long put at different strikes (e.g. short 5700 / long 5650). The gap between strikes is covered by your existing GI. This is the standard MP that generates the most premium.
NORMAL MP
Situation
No GI yet — new member or defensive period
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Flat Structure — Same Strike, Different Dates
Sell the short put and buy the long put at the SAME strike, different expirations. Example: Sell 5700 near-dated / Buy 5700 May. Eliminates the gap exposure that GI would cover. You accept less premium in exchange for built-in protection. "Brand new, whatever strike I choose — use the same strike on the long."
FLAT MP
Situation
Alex in defensive mode — inverted MPs referenced in email
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Inverted Structure — Long Above Short
Long put strike is ABOVE the short put strike. Maximum downside protection built directly into the structure. Accepts significantly less net credit in exchange for reduced risk. Used by Alex when market environment warrants extra caution.
INVERTED MP
Step 3 — Set Up the Two Legs as Independent Inventory
1
Short Put — the weekly income leg
Match Alex's strike and expiration exactly. This is your rolling income engine — collect credit every week. Size per Step 4 below.
⚠️ No GTC close on the short put. It is NEVER closed for profit — always rolled to the next week for fresh credit.
2
Long Put — the protective inventory leg
Use the furthest-out, highest-strike long currently in Alex's Current Trades tab. If starting fresh, match the expiration he specifies. This is your protection — rolled independently when within 30 DTE.
The long put does NOT belong to the short put. They are independent inventory items. Roll either one at any time without touching the other.
3
Long put within 30 DTE? Plan the roll now
When any long put approaches 30 days to expiration, start planning the roll. This is a net debit — it will consume BP. Arrange BP now so the roll doesn't catch you short of capital at a critical moment.
4
Fan your MPs across Monday–Friday expirations
The goal over time is one MP expiring each weekday (Mon/Tue/Wed/Thu/Fri). This fans out gamma risk — no single expiration dominates. Build toward this gradually, one new MP per week as Alex starts them.
Step 4 — Size Your MP Correctly
Instrument
SPX — requires $200k AND Portfolio Margin
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Maximum 5 Contracts to Start
SPX is 10× the size of XSP. Five SPX contracts represent significant exposure. Do not exceed this at launch regardless of account size. Build gradually from there as BP allows.
MAX 5 TO START
Instrument
XSP — accounts under $200k or without PM
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Maximum 5 Contracts to Start
More manageable exposure per contract. Build from 5 as your account and confidence grow. XSP is European style — no assignment risk, IRA eligible.
MAX 5 TO START
BP Rule
After adding new MP
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Minimum 25–30% BP Must Remain
Never exceed 70–75% BP usage. The 25–30% reserve is not optional — it is the capital that allows you to manage rolls, fund long put renewals, and absorb unexpected volatility without being forced to close positions at bad prices.
CHECK BP
Step 5 — Ongoing MP Management Rules
Every Week
Short put expiring today or tomorrow
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Roll at 3:30pm
Wait until 3:30pm to see where the market closes. Then roll to next week's expiration per Alex's direction. UP in strike when market strong and short delta heavy. FLAT when cautious. DOWN when defensive.
ROLL AT 3:30PM
Short put
Significantly in the money
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Roll Immediately — Don't Wait
Deep ITM short puts have little or no extrinsic value left. Roll now to capture any remaining credit and reset the position. "Anything you can get is a bonus — we are in management mode."
ROLL NOW
Market
Drops 200+ points in a day
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GI and Short Calls Are Working
This is the system functioning as designed. Your GI spread is gaining value. Your short calls are gaining value. MPs are under pressure — but the other departments are offsetting it. Do not panic-close MPs. Follow Alex's roll instructions.
TRUST THE SYSTEM
The MP Inventory Mindset — Always
"No long put belongs to any short put." They are all inventory. You may have a 5700 short expiring Friday, a 5650 short expiring next Monday, and long puts out in June at 5600. None are paired. Roll the shorts weekly. Manage the longs when they approach 30 DTE. At full deployment, Alex ran ~50 MP sets — approximately 10 expiring on each weekday — fanning gamma risk across the entire week.
TREE 10
LEAP Entry & Covered Call Campaign
The opportunistic fourth component — deployed during corrections, harvested through the recovery
What the LEAP Strategy Is
A LEAP (Long-term Equity Anticipation Position) is a long call option 6–12+ months out in time. Alex buys LEAPs during significant market corrections to capture the eventual recovery — then sells short-dated calls against them weekly to generate income that pays off the LEAP cost over time. The math often makes the LEAP effectively free within 8 weeks. This is not a permanent position — it is opportunistic, deployed when specific conditions are met and managed through the recovery.
Step 1 — Are All Five Entry Conditions Met?
Condition 1
Market has pulled back 5–10%+ from ATH
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Required — Not Optional
LEAPs at ATH are expensive. The entire strategy depends on buying long calls when they are meaningfully cheaper than at highs. A 5–10%+ correction brings both the underlying price AND implied volatility to levels that make the math work. Do not enter at or near ATH.
CORRECTION REQUIRED
Condition 2
Market has confirmed a bounce — NOT a falling knife
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Confirmation Required Before Entry
"I was not trying to time the bottom. I am trying to get confirmation once I see the movement." Confirmation = market stopped going down AND closed above the 50 SMA with follow-through the next day. Both required. One day is not enough.
WAIT FOR CONFIRMATION
Condition 3
Moving averages beginning to stabilize
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Chart Must Confirm
Spaghetti MAs beginning to resolve. 9 EMA turning up. Stochastics turning from extreme oversold. The squeeze may be forming. Multiple timeframe confirmation that the downtrend is exhausting — not just a dead-cat bounce.
CHECK TA
Condition 4
Short delta protection already in place
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Never Enter a LEAP Naked Long
"I have enough short calls on top to sustain a potential downfall if I'm wrong." Short calls and/or GI must already be in place as downside protection before adding the long LEAP. A LEAP without protection is a directional bet — not the Diamonds system.
PROTECTION FIRST
Condition 5
Alex signals the entry in his email
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Use GTC at His Price — Never Chase
"I will not chase it. I'll let it come to me." Place a GTC buy order at Alex's stated price. If the market doesn't reach that level, no fill — and that is perfectly fine. The discipline of not chasing is as important as the entry itself.
GTC AT HIS PRICE
Step 2 — Alex's Staircase Approach (Scale In, Don't Go All-In)
1
First entry — initial position
One contract at the first key support level Alex identifies. This is the seed — not the full position. If the market reverses from here, you have one contract at a good price and the strategy is already working.
2
Add at each subsequent support level
If the market continues lower, add one more contract at each key level Alex identifies. Example from March 2026: first at 6600, add at 6500 + start MPs, add at 6400 only, add at 6300 + MPs aggressively. Each level = one additional contract, never more.
If the market never reaches the lower levels, you still have a profitable position from the higher entry. Patience is the strategy.
3
Sell short calls against the LEAP immediately on fill
The moment each LEAP fills, sell a short-dated call against it. This begins the income harvest immediately and starts reducing your cost basis from day one. The first covered call credit comes off the LEAP cost.
⚠️ No GTC close on the LEAP itself — it is a long-term position managed manually. GTC closes apply only to the short calls sold against it.
Step 3 — The Covered Call Campaign (Weekly Income Harvest)
Each week
Short call expires or is closed
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Sell the Next Short Call Immediately
Keep the covered call campaign running continuously. Every week without a short call is a week of income left on the table. Sell OTM calls — typically 50–100 points above current market level depending on VIX and Alex's guidance.
SELL NEXT CALL
Math check
After 8 weeks of short call income collected
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LEAP is Effectively Free
At ~50 pts/week × $100 = $500/week. A 400-point LEAP cost ($40,000) recovers in approximately 8 weeks. All subsequent short call income and any LEAP appreciation is pure profit. "It's basically a free trade."
COST RECOVERED
Market scenario
Market never recovers — LEAP expires worthless
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Short Call Income Covers the Loss
If 8+ weeks of covered call income was collected before expiration, the strategy is still profitable even with a worthless LEAP. The math builds in this scenario as the base case — recovery is the upside, not the assumption.
INCOME PROTECTED
Market scenario
Market recovers strongly
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Double Win — Income + Appreciation
LEAP gains intrinsic value as market rallies. Roll short calls progressively higher as market rises. Eventually close LEAP for significant profit. Short call income PLUS LEAP appreciation — the ideal outcome.
DOUBLE WIN
Step 4 — Managing the Short Call When Breached
Short call breached
Market rallies above your short call strike
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Roll Up and Out for Credit — This Is the Ideal Scenario
The market rallying through your short call means your LEAP is gaining value faster than the short call is losing. Roll the short call further up in strike and further out in time for additional credit. The breach signals the recovery the LEAP was bought for is underway.
ROLL UP AND OUT
Market continues lower
After LEAP entry, market keeps dropping
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Continue Selling Lower Short Calls
Rising VIX means more premium per short call. Accept the LEAP mark-to-market loss — it is offset by short call income and will recover with the market. Add the next staircase contract if Alex signals it. This is the plan working, not failing.
STAY THE COURSE
Step 5 — The Hard Exit Rule
200 SMA Hard Exit — Non-Negotiable
If the market closes more than 2.5% below the 200-day SMA on a Friday close — close the LEAP. This signals something has fundamentally changed in market structure beyond a normal correction. The environment that justified buying the LEAP no longer exists. Take the loss. Exit cleanly. This is not a suggestion — it is Alex's hard rule. "This to me is a lifetime trade — unless the market breaks the 200 on a Friday close below two and a half percent."
Friday close
Market closes 2.5%+ below 200 SMA
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🚨 Close All LEAPs
Close every LEAP position. Take the loss. Do not hold through a potential structural bear market with long calls. The covered call income collected to date offsets some of the loss — but exit is mandatory per Alex's rule.
EXIT IMMEDIATELY
Friday close
Market closes within 2.5% of 200 SMA or above it
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Hold — Continue Campaign
No exit signal. Continue selling short calls weekly. The 200 SMA is holding as support. The recovery thesis remains intact.
HOLD AND HARVEST
Why Alex Uses LEAPs
"I am long the market long-term. I want to be able to capture nice sustained up moves — because if you know the money press, within a range it's awesome, but the LEAPs capture that 25% of the upper extreme that the MPs can't fully participate in. That's why I chose that." The LEAP captures the recovery that the MPs structurally cannot fully benefit from — making it the perfect complement to the core income engine.