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 the Russell 2000 iShares (IWM) November, 2014 $116-$119 in-the-money bear put spread at $2.45 or best
Opening Trade
9-26-2014
expiration date: November 21, 2014
Portfolio weighting: 10%, increase short (IWM) exposure from 10% to 20%
Number of Contracts = 41 contracts
You can buy this bear put spread anywhere within a $2.40-$2.50 range and have a reasonable expectation of making money on this trade.
If you can?t trade options, then buy the Short Russell 2000 Fund ETF (RWM) as a 1X play, or the Direxion Daily Small Cap Bear 3X ETF (TZA) for a 3X trade.
Keep in mind that the options market is highly illiquid now, so don?t hold me to these prices. They are ballpark estimates, at best.
Logic to follow.
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.
If the price of this spread has moved more than 5% by the time you receive this Trade Alert, don?t chase it. Wait for the next one. There are plenty of fish in the sea.
Here are the specific trades you need to execute this position:
Buy 41 November, 2014 (IWM) $119 puts at?????$9.04
Sell short 41 November, 2014 (IWM) $116 puts at..??.$6.59
Net Cost:??????????????????.....$2.45
Potential Profit: $3.00 - $2.45 = $0.55
(41 X 100 X $0.55) = $2,255 or 2.30% profit for the notional $100,000 portfolio.
