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) February 2022 $400-$410 in-the-money vertical Bull Call spread at $8.70 or best
Opening Trade
1-21-2022
expiration date: February 18, 2021
Portfolio weighting: 10%
Number of Contracts = 12 contracts
With the Volatility Index topping $28 this morning, it’s time to start adding the “free money” trades. Hedge funds are suffering their worst month in history. The market is down 8.3% in two weeks, the worst New Year opening in history.
Time to buy!
Volatility is so high that you can put on spectacularly in-the-money strike prices for big, short-term profits.
The (SPY) has problems of its own in that it is a particularly technology-heavy index, some 28%, which is facing unique headlines of its own, such as lofty valuations.
I am therefore buying the S&P 500 (SPY) February 2022 $400-$410 in-the-money vertical Bull Call spread at $8.70 or best.
Don’t pay more than $9.20 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 below $410.00 by the February 18 option expiration day in 19 trading days. That is down $30 (SPY) points, or $2,361 Dow Average points from here.
Here are the specific trades you need to execute this position:
Buy 12 February 2022 (SPY) $400 calls at………….………$48.00
Sell short 12 February 2022 (SPY) $410 calls at………..…….$39.30
Net Cost:………………………….………..………….….....$8.70
Potential Profit: $10.00 - $8.70 = $1.30
(12 X 100 X $1.30) = $1,560 or 14.94% in 19 trading days.
If you are uncertain about 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.
