Core-Cash + LEAPS Strategy: How I Made 93% Swing Trading While SPY Dropped 8% — Without Going All In

A low(er)-stress approach using long-dated options, cash reserves, and conviction—designed for staying flexible, profitable, and sane.

*Image sourced via aleksandrrmarkelov

Swing trading can feel chaotic, especially when you're constantly glued to charts, chasing trades, or worrying about market whiplash. But after testing countless approaches, this is the one I keep coming back to. It's a hybrid strategy that uses long-dated options (LEAPS), the Wheel strategy (cash-secured puts and covered calls), and a high cash cushion to compound with control.

Here’s how it works (FYI it’s about to be a lot of information. Break this into days or weeks if you feel overwhelmed. I promise you’ll come out feeling more confident!)

📈 Portfolio Allocation: 65–70% Cash is a Feature, Not a Flaw

• 65–70% Cash: This stays untouched unless we get a clear macro dislocation (e.g. VIX spike, panic selloffs, fear-driven bottoms). It's my cushion to:

  • Sell cash-secured puts on red days

  • Add to LEAPS on red days

  • Layer into shares for covered calls on red days

• 30–35% Active Exposure:

  • LEAPS (minimum 9+ months out) on high-conviction names like SPY, QQQ, NVDA, PLTR

  • Cash-secured puts on stocks I want to own anyway

  • Covered calls on stocks I already own

I rotate between these depending on the market environment.

Cash should never be at 0%. Even in the strongest trends, I always keep at least 25–30% cash to stay nimble and hedge if needed.

🔬 Technical & Macro Framework

I blend macro awareness with technical entry precision. Here’s how I set up:

Chart Timeframes I Use:

I keep it simple and structured. Each timeframe serves a purpose in my swing trading process:

• 4H (4-Hour): My go-to for swing entry setups — clean structure, key levels, and confirmation.

• Daily: I use this to gauge the overall trend, macro alignment, key EMAs, and where we are in the bigger picture.

• Weekly (occasionally): Helpful for spotting longer-term trends, basing structures, and high-conviction levels.

For Entry Timing:

When I’m looking to fine-tune an entry, especially on volatile names like NVDA:

• I’ll zoom into 5min, 30min, or 1hr to catch optimal entries — like reclaiming VWAP, sweep zones, or rejection bounces.

Macro Indicators I Watch:

• CPI, Jobs Data (Nonfarm Payrolls), ISM PMIs

• Fed meetings + interest rate path

• VIX: Panic = opportunity

• Fear & Greed Index: Extreme fear = add; extreme greed = trim

✅ Entry Criteria (Must-Haves)

I only enter trades that check both macro and technical boxes. Example criteria:

1. Macro backdrop: Risk-on sentiment, soft landing narrative, dovish Fed tone

2. Example Technical Setups:

   • Breakout + retest

   • Bounce from key EMA (20/50/150D)

   • Consolidation/base with expansion

Example: Buying a LEAP on NVDA when it reclaims its 50D EMA post-earnings, paired with soft inflation data, bullish semis, 1 week out from major economic release.

For Wheel Trades:

• Sell cash-secured puts when:

  • Fear is high (high IV)

  • Price is near support

  • I'm happy to own shares if assigned

• Sell covered calls when:

  • Price is extended

  • IV is elevated

  • I’m neutral short term on the stock

  • Price may consolidate sideways

❌ Exit Criteria & Thesis Invalidation

I trim into strength, but my exit strategy shifts depending on market conditions:

In choppy or uncertain markets (e.g. tariff headlines, rising yields, or macro noise):

• I'm quicker to lock in gains, often taking profits in the 5–15% range—especially if momentum stalls or the setup loses steam.

In a strong, trending market:

• I'm more patient and aim for 30–50%+ returns on LEAPS before trimming.

• If momentum is sustained and supported by macro tailwinds, I may trail with higher time-frame EMAs or let runners ride into key resistance zones.

Exit Triggers (regardless of market type):

• Key resistance hit (previous high, gap-fill)

• Price stalls or consolidates longer than expected without near term triggers

• Price closes below structure or invalidates entry thesis

• Macro shift (Fed hawkish pivot, earnings miss, unexpected policy moves)

If I'm down 40–50%, I ask:

• Has the thesis broken, or is it just timing that's off?

Does the chart still make sense, or is capital better redeployed?

Example:

🔁 The setup might still be valid, but the market hasn’t moved yet the way you expected — maybe because of:

• Chop or sideways action in the broader market

• A macro event (like Fed minutes, CPI, or earnings) temporarily delaying momentum

• Sector rotation: money is flowing elsewhere, but may come back

• False breakdowns or fakeouts that recover

Let’s say you bought a LEAP on NVDA thinking it would trend higher post-earnings. Instead, the market dips because of a hawkish Fed tone or geopolitical noise.

• Your thesis (AI growth, earnings strength) is still valid

• The price action just needs time to reset or base before the next move up

• In this case, it may be wiser to wait for reaccumulation or a bounce instead of exiting in panic

But if the chart starts breaking down, leadership rotates elsewhere, or the narrative no longer holds — that’s when it’s no longer a timing issue… it’s a broken thesis.

For Wheel Positions:

• Covered calls: I let them expire or roll if I still like the underlying

• Cash-secured puts: I roll for credit or take assignment depending on conviction and available cash

Note: Again, I trim into strength at key levels, but I may be flexible pending the market environment. In choppy or uncertain macro conditions (like rising tariffs or geopolitical noise), I often take profits sooner—sometimes in the 15-50% range—especially if the stock or option premium stalls out. If we’re in a bull market, I may trim in the 60-100% range depending on if there’s more upside potential deploying the cash elsewhere.

⚡️ Risk Management Rules

This strategy is designed to never put me in a position where I have to be right. I keep my overall exposure controlled, let cash be my edge, and size positions based on conviction.

🔒 Standard Sizing (Most Trades)

• Each trade = 1–7% of total portfolio

• No more than 35% exposure across all swing trades

• Avoid overlapping sector risk (e.g., not 3 semiconductors at once)

This works best when the setup looks solid, but I don’t follow the stock day to day. It gives me flexibility to adjust, scale in, or cut losers early without stress.

🔥 Conviction-Based Sizing (Core Trades)

For names I follow very closely (like NVDA), I sometimes size up to 10–20% of my portfolio in a single LEAP swing. But this only happens when:

• I know the key support/resistance levels at all times

• I’m watching the price action daily and have a clear technical + macro thesis

• I use LEAPs (which give time and flexibility)

• I actively trim, roll, or adjust if the setup weakens

Even then, I only run one high-conviction position at a time to avoid concentration risk.

In uncertain environments, I scale back to smaller sizing and keep more cash on hand. Letting cash be my superpower is what helps me stay objective, nimble, and profitable.

🪽 Hedging Tip: How I Protect the Portfolio