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 $465-$475 in-the-money vertical BEAR PUT spread at $8.80 or best
Opening Trade
1-27-2022
expiration date: February 18, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contracts
The Dow Average has just pulled off an incredible $1,200-point overnight swing on the strength of ballistic 6.9% GDP growth. The (SPY) has just done an incredible $25-point round trip.
Where is the next upside surprise from here?
One can point to many downside surprises. An accelerated Fed schedule for interest rates hikes, a sooner than expected end to QE, a quantitative tightening (QT) that has been moved up, soaring oil prices would be among the many. Did I mention war with Russia over the Ukraine?
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 $465-$475 in-the-money vertical BEAR PUT spread at $8.80 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 above $465.00 by the February 18 options expiration day in 16 trading days. That is up 24 (SPY) points from here.
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 12 February 2022 (SPY) $475 puts at……….….………$39.00
Sell short 12 February 2022 (SPY) $465 puts at………….$30.20
Net Cost:………………………….............………..………….….....$8.80
Potential Profit: $10.00 - $8.80 = $1.20
(12 X 100 X $1.20) = $1,440 or 13.64% in 16 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.
