Source: Austin Bouley – How I Trade The 111 Options Strategy On Futures (95% Win Rate)
1. Strategy Concept
Austin Bouley frames the 111 strategy as a “set and forget” income engine specifically optimized for ES Futures. By utilizing span margin on futures, traders can achieve significantly higher returns on capital compared to using SPY. The strategy is designed to be profitable in nearly any market condition: up, down, sideways, or even during a 10% market correction.
- Primary Objective: Consistent weekly income ($350–$495 per contract).
- The Edge: High probability (98% in some backtests) due to the extreme distance of the short strikes and the inclusion of a downside hedge.
2. Trade Mechanics & Entry Rules
Underlying & Capital
- Asset: ES (S&P 500) Futures.
- Collateral: Approximately $6,000 per contract (using Span Margin).
- Recommended Account Size: $20,000–$25,000 to allow for proper scaling and cushion.
The Trade Structure (The “111”)
Austin uses specific Delta targets to construct the trade at 45 Days to Expiration (DTE):
- Sell 1 Naked Put: Target the 10 Delta mark. (The primary income driver).
- Buy 1 Long Put: Target the 30 Delta mark.
- Sell 1 Short Put: Target the 28 Delta mark.
Note on the Hedge: The 30/28 Delta put debit spread is narrow and paid for by the 10 Delta naked put. This spread is your “insurance policy” that pays out if the market drops into that specific range.
3. The Exit Strategy: The 90% Rule
Austin’s management style is more aggressive regarding profit-taking than other versions of this strategy.
- Profit Target: Exit the 10 Delta Naked Put when it reaches 90% to 95% of its max profit.
- The “Bonus” Play: Once the naked put is closed, leave the put debit spread on.
- Since the naked put provides the bulk of the income early (often within the first 26 days), you can bank that profit and keep the debit spread as a “free” hedge for the remaining ~20 days. If the market crashes during those final weeks, the spread provides an additional windfall of ~$230+.
4. Scaling for Consistent Income
To smooth out returns and create a “paycheck” effect, Austin follows a rigorous entry schedule:
- Frequency: Enter a new 111 position every Monday, Wednesday, and Friday.
- The Result: By stacking trades this way, you eventually have positions expiring or reaching profit targets every week, aiming for a consistent $1,200+ per week in total profit.
5. Comparison: Futures vs. ETF
Austin explicitly warns against trading this on SPY if your goal is high ROI:
- Futures (ES): High capital efficiency through Span Margin. $6,000 collateral generates ~$400 profit.
- ETF (SPY): Requires similar capital but yields roughly one-tenth of the profit due to the lack of specialized margin treatment.
6. Summary of Austin’s Rules
| Rule | Parameter |
|---|---|
| DTE | 45 Days |
| Naked Put | 10 Delta |
| Debit Spread | 30 Delta Long / 28 Delta Short |
| Profit Target | 90% of the Naked Put’s value |
| Stop Loss | Not explicitly used; rely on the “Trap” (Debit Spread) as the hedge. |
| Frequency | 3 entries per week (Mon/Wed/Fri) |
Strategy Pedigree
Austin notes that while he trades and backtests this strategy extensively, he credits Tom King as the original source of the 111 methodology. It remains an ideal choice for traders who want to generate income without being “stuck to the screen.”