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. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen.
Further Update to: Trade Alert - (SPY)
Buy the S&P 500 (SPY) November, 2014 $185-$190 in-the-money vertical bull call spread at $4.25 or best
Opening Trade
9-30-2014
expiration date: November 21, 2014
Portfolio weighting: 10%
Number of Contracts = 24 contracts
I am going to take advantage of the volatility spike to $17 here and dip my toe on the long side with the S&P 500 (SPY) November, 2014 $185-$190 in-the-money vertical bull call spread.
For precise instructions on how to execute this trade, please go to my instructional video by clicking here at https://www.madhedgefundtrader.com/ltt-executetradealerts/ .
Pull backs have been so few and fleeting this year that you have to strike quickly while the iron is hot, or your opportunity will rapidly wither and die.
I don?t believe this correction is over yet. For a quarter end day, the quality of the action was exceptionally weak, with a big dump right at the close on Tuesday. The selling will unquestionably spill over into October.
However, I don?t think this will snowball into a full blown 10% correction, the magnitude of which we have not seen for three years (remember the last debt ceiling crisis?).
So, on this Trade Alert, I am going to be more careful than usual in the selection of my strikes. My near money short position in the November $190 call will get major support from a 200-day moving average that is rapidly rising to that level. There is no way we are falling below that average this year, now at $188.34.
My colleague, Mad Day Trader Jim Parker also tells me that there is gigantic quarterly technical support for the (SPY) just above $190.
That means this position has room for the market to suffer its worst hickey of the year, down -6%, and we still are safely in-the-money and profitable with the November, 2014 $185-$190 in-the-money vertical bull call spread.
What is more likely is that some sort of panic incites an intraday spike down that approaches, but doesn?t breach the $190 strike. This is likely to occur during the first two weeks of October. Then a ferocious short covering rally will ignite, that will take us handily to new all time highs by the November 21 expiration date.
I can take a relaxed attitude towards my money losing long positions in Tesla (TSLA), the S&P 500 (SPY), and the ProShares Ultra Short 20+ Treasury ETF (TBT) because I have a 4X ?RISK OFF? short positions in stocks against them.
Even though I am losing money on these three, these will be more than offset by my short side gains, and I will close today at yet another new all time performance high. That is the ?hedge? in Mad Hedge Fund Trader.
These include a 20% short position in the October (SPY) $202-$205 vertical bear put spread, which expires in 12 trading days. I also have another 20% short in the Russell 2000 (IWM) November $116-$119 and $117-$120 vertical bear put spreads, which seem to be disappearing up their own exhaust pipes.
Providing even a bigger cushion are the massive profits we have both realized and unrealized in our many short positions in the Euro (FXE).
You can buy this spread anywhere in a $4.15-$4.35 range and have a reasonable expectation of making good money on this trade.
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:
Buy 24 November, 2014 (SPY) $185 calls at?????$13.63
Sell short 24 November, 2014 (SPY) $190 calls at..??.$9.38
Net Cost:??????????????????.....$4.25
Potential Profit at expiration: $5.00 - $4.25 = $0.75
(23 X 100 X $0.75) = $1,725 or 1.73% profit for the notional $100,000 portfolio.
