Take a look at the following example. Let’s assume the following was the price of ETF SPY when Dragon bot signaled.

When most trades close the same day the algorithm signals, the yield is typically lower—around 17% to 25%—because the position hasn't had time to benefit from Delta acceleration or Theta decay. On Day 0, your profit is driven purely by the stock's price movement. Because you are using a vertical spread, the short leg (the call you sold) gains value almost as fast as your long leg (the call you bought) when the stock moves up. This creates a drag on your immediate P&L, capping your quick gains in exchange for the safety of the hedge. You are effectively capturing the small difference in delta between the two strikes, which results in a consistent but smaller initial payday.

Conversely, the longer the trade takes to reach its target, the more profitable it becomes due to the accelerating effect of Time Decay (Theta). As the days pass, the short call you sold loses its extrinsic value or hope much faster than your "Long" call. This decay acts as a daily credit to your account. If the stock reaches your target on Day 7 or Day 10 instead of Day 1, you aren't just getting paid for the price move; you are also "keeping" the premium from the 695 Call that is slowly expiring worthless. This "Theta crossover" is why a trade that yields $46 today might yield $120 next week at the exact same stock price.

Generally speaking, for a $1-wide spread entered at a debit of $50-$60, you are looking at specific price windows for profit and loss. You can expect to close at a profit if the spread value expands toward the 20% range, which typically happens when SPY moves +$2.00 or holds its ground over several days. On the other hand, you would generally be looking at a loss if the spread value drops below the strike of the call you bought, which occurs if SPY moves against you by more than $1.50 or remains completely stagnant for the first few days while the long leg loses value faster than the short leg. Your ultimate goal is to exit when the market is willing to buy back your spread for more than the $50-$60 you paid to open it.

In simpler words…

Think of this strategy as a protected profit window. When you close a trade on the very first day, you are essentially getting a fast-move bonus. Because you are selling one call to pay for another, your profit is capped early on. You’ll likely see about a 20% gain ($11–$15 profit on average per contract) because the two options are still fighting each other; the one you sold is gaining value almost as fast as the one you bought. You're taking a smaller, quicker paycheck in exchange for the safety of having a hedge in place.

However, the magic of this trade happens if the stock takes its time. The longer you hold (closer to that 5-day mark), the more the Time Decay works in your favor. The option you sold to the market starts losing its value every single day. You are essentially "collecting rent" on that contract. This is why the same price move can pay you $20 on Day 1, but $60 on Day 5; you're getting paid for the price move plus all the time that has passed.

The Price Cheat Sheet

To keep it simple, here is what those numbers look like in your account:

• To Make a Profit: You want to see the value of your spread rise from your entry price (around $58 in the example above) toward $3.00 or higher. If SPY moves up just $2.00, the market will usually offer to buy your spread back for a profit.

• To Hit a Loss: If SPY drops significantly or just sits completely still for a week, the value of your spread might dip.

By using this method, you aren't just betting on the stock going up; you are setting up a trap where you get paid more the longer the stock stays in your "Profit Zone." It turns "waiting" from a frustration into a paycheck.

Key Takeaways:

• The "Patience Paycheck": Notice how the profit jumps significantly between Day 1 and Day 5. This is because the option you sold is losing its value (decaying) much faster as it gets closer to expiring.

• Day 0 vs Day 5: You are making more than double the profit on Day 5 for the exact same stock price move.

• *The Day 5 Risk: On the very last day, "Variable" means your profit depends entirely on whether the stock is above your breakeven. If it's below $710, the profit drops to zero instantly. This is why we usually take the win before the final day.

If by day 5 the trade is still open(we haven’t crossed the $2 mark), it’s ideal to just close it and take the loss. In fact, lets talk about how to set a structured loss on these trades. You can elect to set up a strict 60% stop loss. After backtesting this algorithm and strategy, the goldilock zone to close the trade at a loss is 60%, because the chances of it bouncing back up into profit are almost zero. A 60% stop loss gives the trade plenty of breathing room to move. By having a strict stop loss, you cap the maximum amount of money you can lose on this.

Some thing great about this algorithm is that many times, the price of SPY opens $3-$5 above entry the next day. A move like that can instantly yield anywhere between 35%-60%. You will find yourself holding a lot of trades overnight that open at very big profits, far above your average. Remember, theta is working for you when the price of SPY is above $2 of the price of SPY when you opened the position.

Example

We are going to examine how this entire trade went. As you can see, the algorithm signaled to buy calls when SPY traded at $700.42. As you know, the first thing we are buying is 5DTE calls. The date of that signal was April 16th which means the call has to be April 21st. We will be buying $1 spreads OTM, which means we buy calls $1 above the price of the price of SPY, so a strike of $701 in this case while simultaniously writing a call at $702, making it a $1 spread since the call we are buying and selling are 1 dollar apart.

The $701 calls traded at $4.41, as yopu can see below.

$702 calls, the ones you are writing, traded at $3.90.

The debit premium was $0.51(or $51.00 per contract).
NetDebit = Long Call Price - Short Call Price

$0.51 = 4.41 - 3.90$

Since one standard options contract represents 100 shares, the total cash outlay is $51.00.

The next day, SPY opened up like $10 up from the price it closed the previous day when we opened the position. The $701 calls traded at $7.19 at open while the $702 calls traded at $6.00. This means my gain was 133% overnight. Let me show you the math:

I opened a bull call spread by:

• Buying $701 call at $4.41

• Selling $702 call at $3.90

Step 1: Initial cost (debit)

Net debit = 4.41 − 3.90 = $0.51 per spread
Since options are ×100:

→ $51 cost per spread

Step 2: Value at next day open

• $701 call = $7.19

• $702 call = $6.00

Spread value = 7.19 − 6.00 = $1.19

→ $119 per spread

Step 3: Profit

Profit = 1.19 − 0.51 = $0.68 per share

→ $68 profit per spread

Step 4: Percentage return

Return = 68 / 51 ≈ 133% gain

Final Answer

• Dollar gain: $68 per spread

• Percentage gain: ~133%