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 - (IWM) – TAKE PROFITS
SELL the Russell 2000 (IWM) September 2019 $157-$160 in-the-money vertical BEAR PUT spread at $2.80 or best
Closing Trade
8-14-2019
expiration date: September 20, 2019
Portfolio weighting: 10%
Number of Contracts = 40 contracts
With stocks down 700 points and the charts hinting at a potential double bottom, I am going to clean out the last of my September short positions. Besides, taking home 60% of the maximum potential profit in one day is better than a poke in the eye with a sharp stick. You don’t get 700-point down days in the market every day.
I am therefore selling the Russell 2000 (IWM) September 2019 $157-$160 in-the-money vertical BEAR PUT spread at $2.80 or best. By coming out here, you get to take home $1,200, or 12% in 1 trading day.
This was a bet that the Russell 2000 (IWM) would not trade above $157.00 by the September 20 option expiration day in 22 trading days.
If you don’t do options, stand aside. We are close to the top of a range and it is too late to go long or short.
Here are the specific trades you need to execute this position:
Sell 40 September 2019 (IWM) $160 puts at……......…….………$13.70
Buy to cover short 40 September 2019 (IWM) $157 puts at…..$10.90
Net Proceeds:………………………….………..………….…..........................$2.80
Profit: $2.80 - $2.50 = $0.30
(40 X 100 X $0.30) = $1,200 or 12% in 1 trading day.
To see how to enter this trade in your online platform, please look at the order ticket above, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on How to Execute Vertical Call and Put Debit Spreads by clicking here.
You must be logged into your account to view the video.
Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
Be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today's market, investors need every advantage they can get.
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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.
