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) - BUY
BUY the Russell 2000 (IWM) September 2019 $153-$156 in-the-money vertical BEAR PUT spread at $2.45 or best
Opening Trade
8-26-2019
expiration date: September 20, 2019
Portfolio weighting: 10%
Number of Contracts = 41 contracts
The S&P 500 is up an impressive 30 points this morning based on the president’s claim that the “Chinese are coming back to the table.” The Chinese have responded that nothing could be further from the truth.
That set up a run for the 200-day moving average, down 77 (SPX) points from here.
I am therefore buying the Russell 2000 (IWM) September 2019 $153-$156 in-the-money vertical BEAR PUT spread at $2.45 or best.
Don’t pay more than $2.60 or the risk/reward will go against you.
Remember, in falling market, small cap companies fall faster than large cap ones, about 1.5 times faster.
This is a bet that the Russell 2000 (IWM) will not trade above $153.00 by the September 20 option expiration day in 17 trading days.
If you don’t do options, stand aside. There are no good outright short plays with the market down this far.
Here are the specific trades you need to execute this position:
Buy 41 September 2019 (IWM) $156 puts at………….………$9.50
Sell short 41 September 2019 (IWM) $153 puts at………….$7.05
Net Cost:………………………….…….............…..………….….....$2.45
Potential Profit: $3.00 - $2.45 = $0.55
(41 X 100 X $0.55) = $2,255 or 22.45% in 17 trading days.
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.
