When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Trade Alert - (SPY) TAKE PROFITS
SELL the S&P 500 (SPY) May, 2018 $277-$280 in-the-money vertical bear put spread at $2.95 or best
Closing Trade
4-24-2018
expiration date: May 18, 2018
Portfolio weighting: 10%
Number of Contracts = 40 contracts
Down 600 points in the Dow Average, and down 700 from the intraday high, seems like a great place to take profits on my short position.
Apparently, interest rates DO matter, with the ten year US Treasury bond yield hitting 3.0% for the first time in five years.
Companies are reporting fabulous earnings, not only in technology, but in financials and energy as well. But traders are selling on the news in every case, assuming these are peak earnings.
Caterpillar (CAT) said flat out in their conference call that Q1 is the high-water market in this business cycle.
I think they're wrong. But right now, the burden of proof is on the bulls.
Warlike comments from the president regarding Iran aren't helping either. In the meantime, inflation sensitive stocks like consumer staples, are getting slaughtered.
By coming out here, I can capture 87.50% of the maximum potential profit in this position, and not have to hang around for 18 more trading days until the May 18 option expiration date.
You also get to capture a profit of $1,400, or 13.46%, in only 7 trading days. In this kind of market that is something to brag about at the country club.
So I am selling the second half of my double weighting in the S&P 500 (SPY) May, 2018 $277-$280 in-the-money vertical bear put spread at $2.92 or best.
This was a bet that the (SPY) would not trade above $277 at the May 18expiration date in 25 trading days, compared to the current $262.23.
Well done, and on to the next trade!
Here are the specific trades you need to exit this position:
Sell 40 May 2018 (SPY) $280 puts at.....................$18.00
Buy to cover short 40 May 2018 (SPY) $277 puts at..........$15.05
Net Proceeds:.....................................................$2.95
Profit: $2.95 - $2.60 = $0.35
(40 X 100 X $0.35) = $1,400 or 13.46% in 7 trading days.
To see how to enter this trade in your online platform, please look at the order ticket above, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on How to Execute Vertical Call and Put Debit Spreads by clicking here.
You must be logged into your account to view the video.
Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
Be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today's market, investors need every advantage they can get.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you.
The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.
Don't execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.
