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 $2.92 or best
Closing Trade – NOT FOR NEW SUBSCRIBERS
8-27-2019
expiration date: September 20, 2019
Portfolio weighting: 10%
Number of Contracts = 38 contracts
Since this morning’s opening, the Dow Average has plunged by 333 points and the Volatility Index has popped from $18.50 to $21. And we haven’t even gotten a Tweet yet!
The markets are currently discounting a breakdown in ten-year US Treasury bond yield to new all-time lows, which are presently levitating at an incredible 1.47%. Recession fears are running rampant. All asset classes are now predicting a bear market.
I am therefore selling the Russell 2000 (IWM) September 2019 $157-$160 in-the-money vertical BEAR PUT spread at $2.92 or best. As a result, you get to book a profit of $1,216 or 12.30% in 6 trading days. By coming out here, you are capturing 80% of the maximum potential profit.
Remember, in falling market, small cap companies fall faster than large cap ones, and it certainly worked this time.
This was a bet that the Russell 2000 (IWM) will not trade above $157.00 by the September 20 option expiration day in 19 trading days.
Here are the specific trades you need to exit this position:
Sell 38 September 2019 (IWM) $160 puts at……….......……$15.00
Buy short 38 September 2019 (IWM) $157 puts at………….$12.08
Net Proceeds:………………………..………….…..........................$2.92
Profit: $2.92 - $2.60 = $0.32
(38 X 100 X $0.32) = $1,216 or 12.30% in 6 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.
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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.
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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.
