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) - EXPIRATION AT MAX PROFIT
EXPIRATION of the S&P 500 (SPY) May 2022 $365-$375 in-the-money vertical bull call spread at $10.00 or best
Closing Trade
5-20-2022
expiration date: May 20, 2020
Portfolio weighting: 10%
Number of Contracts = 11 contracts
Just to be clear, this position does not expire at max profit until today, Friday, May 20 at the 4:00 PM EST close. I am going to show you the accounting now, so you don’t get overwhelmed.
With the upper strike price an astonishing 11 points in the money, I think it is safe to call this one a win. As a result, you get to take home $1,320 or 13.63% in 9 trading days.
While I believe that while markets will be weak in the coming weeks, I don’t think we are in for an outright crash. Interest rates are just too low, and foreign money is still pouring into the markets, as you can see in the incredible strength of the US dollar.
We are also back in the sweet spot for adding new options spread positions with the Volatility Index (VIX) back above $30.
Well done, and on to the next trade.
You don’t have to do anything with this expiration.
Your broker will automatically use your long position to cover your short position, canceling out the total holdings.
The entire profit will be credited to your account on Monday morning May 23 and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
This was a bet that the S&P 500 (SPY) will not trade below $375.00 by the May 20 options expiration day in 9 trading days.
Here is the specific accounting you need to close out this position:
Expiration of 11 May 2022 (SPY) $365 calls at………….………$39.20
Expiration of short 11 May 2022 (SPY) $375 calls at………….$29.20
Net Proceeds:…………………………............………..……….….…..$10.00
Profit: $10.00 - $8.80 = $1.20
(11 X 100 X $1.20) = $1,320 or 13.63% in 9 trading days.
