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 - (GM) – EXPIRATION AT MAX PROFIT
Expiration of the General Motors (GM) March 2025 $53-$56 in-the-money vertical bear put debit spread at $3.00
Closing Trade
3-21-2025
expiration date: March 21, 2025
Portfolio weighting: 10% weighting
Number of Contracts = 40 contracts
Because we have so many options positions expiring at max profit today, March 21 option expiration day, I am going to start feeding these out now.
Like all successful trades, this one looks stupidly cautious with 20:20 hindsight and (GM) at $49.75.
This trade is a great example of how well vertical bear put debit spreads can work for you. Even though the stock rose, we still made the maximum profit. All the money was made on the volatility collapse from $57 to just $36 in just two weeks. Nothing like getting paid for being wrong.
This shows how you can be rewarded enormously when volatility spikes on market crash days when every other investor is panicking. You just need the courage of your convictions to add positions when everyone else is running around like a chicken with its head cut off.
As a result, you get to take home $1,600 or 15.38% in 11 trading days. 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 March 24 and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
The flight of money right now is from small, undercapitalized, and questionable to large, overcapitalized, and rock-solid balance sheets.
The trade wars, or even the threat of them, are throwing the US economy into complete turmoil, and there is no end in sight. So I have been on the hunt for short positions that benefit from falling stock prices. I expect the selloff to amount to 20% for the S&P 500 by summer. If I’m wrong, it’s going down 50%.
It's hard to name a more damaged company than General Motors (GM). The company completely restructured itself to fit the United States-Mexico-Canada Agreement (USMCA), signed by President Trump in 2019 replacing the existing North American Free Trade Agreement (NAFTA).
Now Trump tearing up that treaty and throwing it in the trash. That leaves (GM) horribly out of position with its manufacturing base. It has tens of billions of dollars worth of factories in the wrong places that aren’t easily moved.
Over 25% of (GM)’s cars are built in Canada and Mexico, with some parts crossing borders several times. These will be subject to the new 25% import duty, forcing the company to raise prices by a highly inflationary $10,000 per vehicle. The required restructuring is so enormous and so traumatic that (GM) may not survive. At the very least, mass unemployment in Detroit will ensure.
We also learned today that delinquencies on auto loans hit a new all-time high at 3.17%.
With this trade, I was willing to bet that (GM) shares would not rise above $53 by the March 21 option expiration in 11 trading days.
Here is the specific accounting you need to close out this position:
Expiration of 40 March 2025 (GM) $56 puts at……….…$6.25
Expiration of Sell 40 March 2025 (GM) $53 puts at…….$3.25
Net Proceeds:………………………….……….…………..........…$3.00
Profit: $3.00 - $2.60 = $0.40
(40 X 100 X $0.40) = $1,600 or 15.38% in 11 trading days
