As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price.
Trade Alert - (SPY)
Sell the S&P 500 (SPY) May, 2014 $193-$196 in-the-money bear put spread at $2.80 or best
Closing Trade
4-7-2014
expiration date: May 16, 2014
Portfolio weighting: 10%
Number of Contracts: 42 contracts
I?m sorry, but capturing 68% of a potential profit in a six week put spread in just one day is too much to ignore. I am taking profits here so I can resell a new spread closer to the money for more premium on the next short covering rally.
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.
Keep in mind that these are ballpark prices only. Spread pricing can be very volatile on expiration months farther out.
Here are the specific trades you need to execute this position:
Sell 42 May, 2014 (SPY) $196 puts at?????$11.49
Buy to cover short 42 May, 2014 (SPY) $193 puts at..??.$8.69
Net Cost:??????????????????.....$2.80
Profit at expiration: $2.80 - $2.37 = $0.43
(42 X 100 X $0.43) = $1,806 or 1.81% profit for the notional $100,000 portfolio.
