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)- TAKE PROFITS
SELL the S&P 500 SPDR?s (SPY) March, 2016 $176-$181 in-the-money vertical bull call spread at $4.98 or best
Closing Trade-NOT FOR NEW SUBSCRIBERS
3-3-2016
expiration date: March 18, 2016
Portfolio weighting: 10%
Number of Contracts = 23 contracts
I am taking profits on my position in the S&P 500 SPDR?s (SPY) March, 2016 $176-$181 in-the-money vertical bull call spread, WHILE WE ARE WAY UP HERE $17 points in the money.
Yes, we did nail the absolute bottom in the market at $181.
And yes, markets CAN dive $20 (SPY) points in a week. I have seen it happen more than once.
If you don?t believe me, look at the chart below which shows that New York Stock Exchange Margin Debt, or the amount of stocks bought on credit, is peaking.
This is a warning light not just for stocks, but all risk assets everywhere, even oil.
That is the answer to the reader who asked why I am taking profits on call spreads so far in the money with only 11 days left until the March 18 expiration.
I?ll let some other moron else the risk trying to earn the last two cents on the position.
Well done to you on this trade. You earned a respectable 15.54% profit in only six trading days. You now have more dry powder with which to reload on the next $6 dip, which will inevitably come.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of optionshouse.
If you are uncertain on how to execute an options spread, please watch my training video on ?How to Execute a Bull Call Spread? by clicking here at https://www.madhedgefundtrader.com/ltt-executetradealerts/. You must me logged into your account to view the video.
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.
Here are the specific trades you need to execute this position:
SELL 23 March, 2016 (SPY) $176 calls at????.?.??$23.30
Buy to cover short 23 March, 2016 (SPY) $181 calls at.?..$18.32
Net Cost:???????????????????......$4.98
Profit: $4.98 - $4.31 = $0.67
(23 X 100 X $0.67) = $1,541 or 1.54% profit for the notional $100,000 portfolio
