Cash Flow Expectation (CFE) | Tackle Trading

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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.

Originally published at tackletrading.com on January 4, 2019.