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.
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Trade Alert - (SPY)- TAKE PROFITS
SELL the S&P 500 SPDR?s (SPY) August, 2016 $221-$224 in-the-money vertical bear put spread at $2.90 or best
Closing Trade
8-2-2016
expiration date: August 19, 2016
Portfolio weighting: 10%
Number of Contracts = 37 contracts
We managed to capture a 9.43% profit in our short position in the (SPY) in just two trading days.
Since I strapped on this position, we have plunged from a new all time high in the (SPY) to a three week low.
By taking profits here, we also get to dodge the bullet of the July nonfarm payroll report on Friday.
So basic risk control demands that I take profits on the S&P 500 SPDR?s (SPY) August, 2016 $221-$224 in-the-money vertical bear put spread, having made so much money so fast.
I?m sure I?ll get another chance to put this position back on at a future date.
In any case, at $2.90 we are harvesting 71.42% of the maximum potential profit. Taking profits here means I don?t have to wait for 13 more trading days to see if I am a hero or a goat.
Profits for hedge funds have been few and far between this year, and this one is better than a poke in the eye with a sharp stick.
To see how to exit 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 Vertical Bear Put Debit 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 with only 9 days to expiration.
Here are the specific trades you need to execute this position:
Sell 37 August, 2016 (SPY) $224 puts at????.?.??$9.00
Buy to cover short 37 August, 2016 (SPY) $221 puts at.?..$6.10
Net Cost:???????????????????......$2.90
Profit: $2.90 - $2.65 = $0.25
(37 X 100 X $0.25) = $925 or 9.43% profit in 14 trading days.
