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.
Trade Alert - (IWM)- BUY
Buy the Russell 2000 iShares ETF (IWM) April, 2016 $112-$117 in-the-money vertical bear put spread at $4.44 or best
?3-8-2016
Opening Trade
expiration date: April 15, 2016 (tax day)
Portfolio weighting: 10%
Number of Contracts = 22 contracts
You can pay all the way up to $4.60 for this spread and it still makes sense.
If you can?t trade options buy the -1X ProShares Short Russell 2000 ETF (RWM) (click here for the link to the prospectus at http://www.proshares.com/funds/rwm.html).
This is a bet that the Russell 2000 iShares ETF (IWM) trades at or below $112 at the April 15 options expiration. It last traded at $107.32.
To see how to enter 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 Bear Put Debit Spread? by clicking here at https://www.madhedgefundtrader.com/ltt-executetradealerts/.
You must be 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 on expiration months farther out.
Here are the specific trades you need to execute this position:
Buy 22 April, 2016 (IWM) $117 puts at????.?.??$10.20
Sell short 22 April, 2016 (IWM) $112 puts at.????..$5.76
Net Cost:???????????????????......$4.44
Potential Profit: $5.00 - $4.44 = $0.56
(22 X 100 X $0.56) = $1,232 or 12.3% profit in 28 trading days
