Bearish Engulfing is one of three key candlestick reversal patterns I track every day on the daily chart using TC2000.
The other two are Evening Star and Dark Cloud Cover — each with a dedicated post explaining how I use them.

These three patterns help me identify exhaustion points — potential short-term tops — where the market may be due for a pullback. That’s where I deploy Bear Call Credit Spreads, always with a 10-delta short leg and a defined risk.

What It Looks Like

This pattern has two candles:

• The first is bullish (green), closing higher than it opened.

• The second is bearish (red), and it completely engulfs the body of the first candle.

Wicks can extend beyond, but the key is:
the second candle must close below the open of the first — that’s what makes it a true engulfing.

What It Signals

The psychology is straightforward.

Day 1: buyers are in control, price climbs, confidence is high.
Day 2: that confidence vanishes — sellers come in force and erase all the prior day’s gains.

This sudden reversal suggests a sharp shift in sentiment.

It often happens because:

• Big players are taking profits,

• A catalyst or news changes the outlook,

• Everyone who wanted to buy already did — and demand dries up.

It’s a classic exhaustion move. Bears take over.

Ideal Conditions

To give this pattern real meaning, I only act on it when there’s clear overextension to the upside.

Ideal conditions:

• At least 15 strong green days in a row, or a sharp vertical move up

• RSI > 75 (overbought)

• A fresh local or even absolute high

• Bonus points if it happens near a major resistance level

This is where the odds tilt in favor of a pullback.

Volume Confirmation

Volume on the second (bearish) candle matters.

If it’s above average — and ideally higher than the volume on the bullish candle — that adds serious weight to the signal.

It tells me that real selling pressure has entered the tape — not just random drift.

TC2000: How I Scan for It

In TC2000, I use a custom scanner to surface these setups only on liquid, optionable stocks.

The filters include:

• Price has closed above key moving averages (EMA12, EMA26,SMA50) for 15 days in a row

• RSI is elevated (above 75)

• The stock is in the top 15% of its range for the lookback period

• Market cap > $25B

• Optionable = true

And for the pattern itself:

• The prior day was a bullish candle

• The current day is a bearish candle that fully engulfs the previous body

• The body of the bearish candle is larger than the previous day’s

• Close of the bearish candle is below the open of the bullish one

• Bonus: a gap-up at the open adds strength

These filters help cut through the noise and focus only on high-conviction signals.

Disclaimer

All content is for informational purposes only and does not constitute financial advice.Any trades or strategies should be tested in a simulated environment before use.Trading involves risk, and all decisions are the sole responsibility of the reader.

Evening Star is one of three key candlestick reversal patterns I track every day on the daily chart using TC2000.
The other two are Bearish Engulfing and Dark Cloud Cover — each with a dedicated post explaining how I use them.

These three patterns help me identify exhaustion points — potential short-term tops — where the market may be due for a pullback. That’s where I deploy Bear Call Credit Spreads, always with a 10-delta short leg and a defined risk.

What It Looks Like

This pattern has three candles:

• The first is a long bullish candle (green) — strong upward continuation

• The second is a small-bodied candle, often with a gap up — it can be green, red, or a doji

• The third is a bearish candle (red), which closes deep into the body of the first

The pattern is strongest when:

• The second candle closes near the highs, forming hesitation

• The third candle closes below the midpoint of the first

• The second candle is a doji — showing max indecision

What It Signals

The Evening Star tells a story of transition.

Day 1: bulls are in full control — price pushes higher confidently.
Day 2: hesitation — the market gaps up, but doesn’t follow through.
Day 3: sellers step in and reverse the momentum.

It’s a shift from strength → indecision → weakness.
A classic topping formation.

Common reasons this shows up:

• Buyers are exhausted, no new demand

• Resistance is respected

• Sellers act on a catalyst or news

• Profit-taking intensifies

The most reliable Evening Stars appear after a sharp move up — they don’t top from a flat base.

Ideal Conditions

To give this pattern real weight, I look for setups where momentum is stretched.

Ideal conditions:

• A sustained uptrend for at least 15 days, or a strong upside impulse

• RSI > 75 (overbought), 65+ acceptable on strong moves

• Price is near a recent or absolute high

• Candle 1 is large and bullish

• Candle 2 is small-bodied, ideally a doji, and doesn’t exceed candle 1

• Candle 3 is bearish and closes deep into candle 1

• No strong catalysts (like earnings or positive guidance)

Volume Confirmation

Volume provides valuable context:

• Candle 1: strong volume is expected (buying climax)

• Candle 2: low or fading volume (hesitation)

• Candle 3: above average — confirms that sellers are in control

The pattern is especially strong when candle 3’s volume exceeds that of candle 1.

TC2000: How I Scan for It

In TC2000, I use a dedicated scanner for Evening Star setups, filtering only liquid, optionable, large-cap stocks.

The filters include:

• Price has closed above EMA12, EMA26, and SMA50 for 15 days in a row

• RSI is elevated (above 75 preferred)

• The stock ranks in the top 15% of its range (strong upward move)

• Market cap > $25B

• Optionable = true

And for the pattern itself:

• Candle 1 is a bullish candle

• Candle 2 is small-bodied and closes near the high

• Candle 3 is a bearish candle that closes below the midpoint of candle 1

• Bonus: volume on candle 3 is elevated

These filters help isolate only the cleanest, most actionable Evening Star setups.

Disclaimer

All content is for informational purposes only and does not constitute financial advice.Any trades or strategies should be tested in a simulated environment before use.Trading involves risk, and all decisions are the sole responsibility of the reader.

Dark Cloud Cover is one of three key candlestick reversal patterns I track every day on the daily chart using TC2000.
The other two are Bearish Engulfing and Evening Star — each with a dedicated post explaining how I use them.

These three patterns help me identify exhaustion points — potential short-term tops — where the market may be due for a pullback. That’s where I deploy Bear Call Credit Spreads, always with a 10-delta short leg and a defined risk.

What It Looks Like

This pattern has two candles:

• The first is a long bullish candle (green), showing strong upside momentum

• The second opens with a gap up, but then closes below the midpoint of the first candle

• Importantly, the second candle does not fully engulf the first one (unlike Bearish Engulfing)

What It Signals

The story behind this pattern is about bullish momentum failing.

• The market opens higher (gap up) — bulls are excited

• But instead of continuing upward, sellers immediately step in

• The candle closes deep into the prior bullish bar

This rejection often leads to a reversal or at least a pause.
The bulls have lost control — and that’s the moment the bears get active.

It’s especially effective when:

• The gap up triggers breakout buyers

• But the close shakes them out entirely

The result?
A sentiment shift. From overconfidence → doubt → potential selloff.

Ideal Conditions

To increase the reliability of this pattern, I look for stretched setups in strong uptrends.

Ideal conditions:

• Price has closed above EMA12, EMA26, and SMA50 for 15 days in a row

• RSI > 75 (overbought)

• Price is at or near recent or absolute highs

• There is a gap up between the two candles

• The red candle closes below the midpoint of the green candle

• No major positive catalysts (like earnings or guidance)

These factors increase the likelihood that the reversal is real — not noise.

Volume Confirmation

Volume can make or break this setup.

• Green candle: may come with high volume (final surge of buying)

• Red candle: ideally has normal to elevated volume

If volume increases on the red candle, that adds conviction:
sellers are not just present — they’re active.

TC2000: How I Scan for It

In TC2000, I use a custom scanner to isolate these setups on large-cap, optionable stocks with clear technical structure.

The filters include:

• Price has closed above EMA12, EMA26, and SMA50 for 15 consecutive days

• RSI is elevated (above 75 preferred)

• The stock is in the top 15% of its range for the lookback period

• Market cap > $25B

• Optionable = true

And for the pattern itself:

• Day 1: bullish candle

• Day 2: bearish candle

• The second candle opens above the high of the first (gap up)

• The second candle closes below the midpoint of the first

• The bearish candle does not fully engulf the first one

These conditions help isolate real signals from noise — and create reliable entries for credit spreads.

Disclaimer

All content is for informational purposes only and does not constitute financial advice.Any trades or strategies should be tested in a simulated environment before use.Trading involves risk, and all decisions are the sole responsibility of the reader.

Vertical Credit Spread

Structure

Sell 1 OTM (Out of The Money) option, buy 1 further OTM option, same expiration.

Types

• Bear Call Spread — for bearish bias

• Bull Put Spread — for bullish bias

Example: stock at $98 → Sell 100C, Buy 105C, same expiry.

Used for

Directional plays (bullish or bearish) with short time horizon.

Key traits

• Defined risk and reward

• Profits from time decay

• Best when IV is high

• Clean payoff chart (max profit if price stays above/below short strike)

Best when

You expect price to move and stay in your chosen direction.

Note: this is the core structure behind both of my systems:

• 10-Delta Credit Spread Strategy

• Put Credit Spread on QQQ Strategy

Calendar Spread

Structure

Sell 1 near-term option, buy 1 longer-term option, same strike.

Types

• Calendar Call Spread — for neutral-to-bullish bias

• Calendar Put Spread — for neutral-to-bearish bias

Example: stock at $100 → Sell 100C expiring next week, Buy 100C expiring in a month.

Used for

Neutral or range-bound outlook, or when expecting volatility to increase.

Key traits

• Gains from IV expansion

• Time decay hurts short leg faster

• Narrowest profit range (centered on strike)

• Usually placed ATM

Best when

You expect the stock to stay near a certain strike — and IV to rise.

Diagonal Spread

Structure

Sell 1 near-term OTM option, buy 1 longer-term further OTM option.

Types

• Diagonal Call Spread — for moderately bullish bias

• Diagonal Put Spread — for moderately bearish bias

Example: stock at $102 → Sell 105C (near-term), Buy 110C (longer-term)

Used for

Directional setups with time and IV flexibility.

Key traits

• Hybrid of vertical and calendar

• Complex P/L profile (not symmetric)

• Can profit from price move and IV change

• Can be adjusted into other structures (e.g. roll the short leg)

Best when

You want directional exposure with time cushion and sensitivity to volatility.

Disclaimer 

All content is for informational purposes only and does not constitute financial advice.Any trades or strategies should be tested in a simulated environment before use.Trading involves risk, and all decisions are the sole responsibility of the reader.

This publication is where I share my work with two focused systems built around options strategies.

The focus is on repeatable setups — ones that can be structured, tested, and improved over time.

I don’t claim to have the perfect answer — just two methods I keep refining and using week after week.

All trades — wins and losses — go into my Trade Log as they are, with nothing smoothed over.

What I Track

The foundation of my trading work revolves around three key reversal candlestick patterns:

• Bearish Engulfing

• Evening Star

• Dark Cloud Cover

I use TC2000 to scan for these signals daily. Scanning is only the first filter — I manually review every result to confirm the price action visually. Only meaningful setups make it into the shortlist.
Sometimes, these become observations or hypotheses worth sharing on their own. Those go in the publication as well.

Strategy #1

10-Delta Credit Spread

If a ticker from the shortlist confirms a reversal, I apply a directional credit spread with a strong focus on the probability of success.

👉👉👉 The 10-delta logic, unpacked 👈👈👈

Here’s how it works in practice:

• I open a Bear Call Credit Spread when the price moves higher and forms one of the three reversal patterns.

• The short leg (the call I sell) is always selected based on ~10 delta.

• The long leg is a further out-of-the-money call to cap the risk.

• Expiration is chosen within a 45-day window.

Why 10-delta?

Delta approximates the probability of an option expiring in the money.
A 0.10 delta call has roughly a 10% chance of being in-the-money by expiration — which means a 90% chance of keeping the premium.
That’s the core logic here. I don’t try to predict — I wait for the market to flash a reversal pattern, then sell risk far above the current price where continuation becomes unlikely.

It’s not about maximizing gains.
It’s about stacking high-probability trades with defined risk.
Even a 12–15% risk/reward ratio is acceptable here — because the focus is consistency and edge, not outlier profits.

Each candidate goes into my Google Sheets model, where I compare expirations, strikes, risk/reward, max risk, and expected premium.
If the setup is favorable, I take the trade — and publish it under Tactical Spreads, along with chart, breakdown, and OptionStrat link.

Strategy #2

QQQ Weekly Put Spread

This is a separate system, independent from any patterns.
Every Friday, I sell a Put Credit Spread on QQQ — a liquid and predictable index ETF.

Here’s the simple structure:

• Sell a PUT that gives me ~$0.55–0.60 premium

• Buy a PUT 25 points lower for ~$0.05

• Entry: Friday

• Expiration: Next Friday

• Net premium: ~$0.50 → Target: $500 per week

Why it works

Markets rise or move sideways more often than they crash.
QQQ rarely drops sharply within a week.
So I take that premise — and sell a spread with downside buffer and premium cushion.

The logic is not prediction — it's mechanical repetition.
Same action. Same day. Defined risk.

If QQQ drops below the short strike and the spread moves ITM, I enter the protection phase:

• Buy a long-dated QQQ CALL (~6 month from current date)

• Sell short-term weekly CALLs against it until recovery

This allows me to reduce drawdown and potentially earn even in bad scenarios.
All trades are shared under the QQQ Weekly Trades section.

Who This Blog Is For

• Traders looking for structured, repeatable options strategies

• Chart analysts who want to turn price action into risk-defined trades

• Anyone tired of hype, forecasts, and theatrics — and ready to see real setups, real numbers, and real assumptions

Frequently Asked Questions

▶ Do you take every signal that fits the pattern?
No. The pattern is just the beginning. I manually filter all candidates and only act when structure, momentum, and context align. Some days, there are zero trades — and that’s perfectly fine.

▶ How do you manage overlapping trades?
I keep it simple: only one active trade per strategy at a time. This avoids dilution of focus and helps stay disciplined. If I’m already in a QQQ position, I wait for it to resolve before entering the next.

▶ How do you decide when to exit a spread early?
If a credit spread has captured most of its premium (usually 70–90%) and the chart no longer supports staying in, I’ll close it. There’s no ego in holding — only math.

▶ What’s your approach to losing trades?
They happen. I focus on process over outcome. Every loss is reviewed: Was the pattern valid? Was the entry too late? Did I ignore price action? I log every trade and adjust accordingly — but never chase or double down emotionally.

▶ Why do you publish real trades publicly?
Because I believe in transparency. This blog isn’t a signal service or performance flex — it’s a public notebook. Sharing real trades, with all the imperfections, helps sharpen thinking and invites useful feedback.

▶ What tools do you use to trade and track your work?
I use a focused stack of platforms for screening, planning, and execution. You can view the full list here: Trading Stack

Disclaimer

All content is for informational purposes only and does not constitute financial advice.Any trades or strategies should be tested in a simulated environment before use.Trading involves risk, and all decisions are the sole responsibility of the reader.

Many people who step into the world of options trading quickly run into frustration: things seem logical on paper, but in practice, trades don’t hold up. Especially when it comes to directional bets — buying a call in hopes of a rally, or a put in hopes of a crash. It sounds simple. But more often than not, it ends in losses.

The reason? You're betting on what you want to happen — not on what’s probable.

There’s another path — strategies that lean on high probability.
Strategies where you win not because the market moved how you predicted, but because it didn't go far enough to hurt you.

One such approach is the credit spread strategy built around selling 10-delta options.

This system doesn’t rely on predicting direction.
It relies on probability, defined risk, and sound math.

What Is a Credit Spread

Let’s back up for a second.

An option is a contract that gives the buyer the right (but not the obligation) to buy or sell a stock at a specific price (called the strike) before a specific date (called the expiration).

There are two basic types:

• A call gives the right to buy (used when expecting a rise)

• A put gives the right to sell (used when expecting a drop)

When you buy an option, you pay a premium.
When you sell an option, you collect a premium — that’s key.

A credit spread involves using two options of the same type (both calls or both puts), with different strikes:

• You sell one (collecting premium)

• You buy another (paying a smaller premium to cap your risk)

The difference between the two premiums is your credit — your potential profit.

Why it works:

• Your risk is capped

• Your maximum profit is known up front

• And your chance of success can be high — if you pick strikes far enough from current price

What Does “10 Delta” Mean — and Why It Matters

Here’s the core.

Delta is a number that tells you two things:

1. How much the option price moves relative to the stock

2. (And more importantly for us) the rough probability that the option will expire “in the money”

Example:

• A delta of 0.50 = about 50% chance of finishing in the money

• A delta of 0.10 (aka 10 delta) = about 10% chance

So, if you sell a 10-delta option, you’re basically saying:

“I’m betting there’s a 90% chance the stock won’t reach this level by expiration.”

You're not trying to guess direction.
You're acting like an insurance company, selling protection on events that probably won’t happen — and collecting a premium for doing it.

The Two Sides: Bullish and Bearish 10-Delta Spreads

The beauty of this strategy is that it works in both directions — you just flip the setup.

🔻 Bear Call Credit Spread

You sell a call option with 10 delta, and buy a higher-strike call to cap your risk.

This setup profits if the market:

• drops,

• moves sideways,

• or even rises slightly — as long as it doesn't reach your short strike.

Best used when the market is overbought or after a sharp rally.

🔺 Bull Put Credit Spread

You sell a put option with 10 delta, and buy a lower-strike put to limit your downside.

This setup profits if the market:

• rises,

• stays flat,

• or even drops slightly — as long as it stays above your short strike.

Best used after panic selling, at support, or when the market feels exhausted to the downside.

In both cases, your edge is this:

You’re not betting on where the market will go — only on where it probably won’t.

That’s why 10-delta options are used: they mark the levels least likely to be touched.

Real-World Example

Let’s say a stock is trading at $100.

You sell a call option at the $112 strike (which has ~10 delta), expiring in 30 days.
You collect $0.85 in premium.

To define your risk, you buy a call at $117, paying $0.20.

Your total:

• Collected: $0.85

• Paid: $0.20

• Net credit: $0.65 per share × 100 shares = $65 total (your max profit)

• Max risk: $5.00 spread width – $0.65 = $4.35 per share × 100 = $435

So you’re risking $435 to potentially make $65 — that’s a 14.9% return on capital in 30 days, with roughly a 90% chance of profit.

Want to visualize this? Try tools like OptionStrat.

Why This Can Work Consistently

Probability of Touch vs. Probability of Profit

The market may “touch” your short strike — but that doesn’t mean it stays there.
Often it reverses before expiration.
That’s why probability of touch is higher than probability of loss.
You have room to be wrong temporarily and still win.

You Profit from Market Emotion

Most traders chase action.
This strategy profits from selling what others are afraid of (or hopeful for).
You’re taking the other side of fear and greed — collecting premium from those who overpay for unlikely outcomes.

It shines in moderate or high implied volatility

When volatility rises, premiums expand.
That means you can:

• Collect more credit at the same strike

• Or go further out-of-the-money for the same return

Either way, the setup becomes more attractive.

What Can Go Wrong

• Big move against your position — delta increases fast. You must have a plan to exit early and not let a 90% win become a 100% loss.

• Earnings or binary events — never place a spread on a stock with an upcoming earnings report. Even 10-delta won’t save you from a surprise move.

• Overconfidence — risking $450 to make $50 sounds safe, but don’t go all-in. This strategy works through repetition, not oversized positions.

Tools That Help

• TC2000 — to spot overbought/oversold charts and potential reversal patterns

• OptionStrat — to model spreads, visualize risk/reward, and track delta exposure

• Google Sheets — for calculating max profit, risk, and keeping a trade log

Conclusion

The 10-delta credit spread strategy is a way to trade with probability, not prediction.
It gives you:

• Defined risk

• A repeatable edge

• Flexibility to exit early

• And a framework that aligns with market logic

It’s not a magic formula.
But it’s a system — one you can test, refine, and scale with confidence.

Disclaimer 

All content is for informational purposes only and does not constitute financial advice.Any trades or strategies should be tested in a simulated environment before use.Trading involves risk, and all decisions are the sole responsibility of the reader.