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) - BUY
BUY the S&P 500 (SPY) March 2021 $400-$405 in-the-money vertical BEAR PUT spread at $4.50 or best
Opening Trade
3-4-2019
expiration date: March 19, 2021
Portfolio weighting: 10%
Number of Contracts = 24 contracts
We have just enjoyed an incredible 162-point rally off the March 20 bottom in the S&P 500 (SPY) during the last year. When I looked at the strike prices for this trade a year ago, I have to laugh. They were the $260-$270 put spread, and I made money on it!
With a near double in 12 months, I believe that the rate of appreciation is going to have to slow. The low-hanging fruit has already been harvested. So, for the first time in six months, I am going to add a short position.
I am therefore buying the S&P 500 (SPY) March 2021 $400-$405 in-the-money vertical BEAR PUT spread at $4.50 or best
Don’t pay more than $4.70 or you’ll be chasing.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
This is a bet that the S&P 500 (SPY) will not trade above $400.00 by the March 19 option expiration day in 11 trading days. That is up 22 (SPY) points, or $1,711 Dow Average points from here. If the market gets that high in 11 days, you will think you have died and gone to heaven.
If you don’t do options stand aside. This is a very short-term options expiration play only.
Here are the specific trades you need to execute this position:
Buy 24 March 2021 (SPY) $405 puts at………….………$26.00
Sell short 24 March 2021 (SPY) $400 puts at………….$21.50
Net Cost:………………........………….………..………….….....$4.50
Potential Profit: $5.00 - $4.50 = $0.50
(24 X 100 X $0.50) = $1,200 or 11.11% in 11 trading days.
If you are uncertain on how to execute an options spread, please watch my training video by clicking here.
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 on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
