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 - (SPY) – TAKE PROFITS
SELL the S&P 500 (SPY) May 2020 $300-$310 in-the-money vertical BEAR PUT spread at $9.10 or best
Closing Trade - NOT FOR THOSE WHO SUBSCRIBED THIS WEEK
4-15-2020
expiration date: May 15, 2020
Portfolio weighting: 10%
Number of Contracts = 13 contracts
Stocks dove 600 points this morning on Trump’s move to defund the World Health Organization, blaming the international research institution for under reporting Chinese Corona cases. The stunningly bad decision ensures the pandemic will be deeper and lasts longer, especially in poor countries, where deaths will rise to the millions.
All faith in leadership at the top is gone during the defining crisis of this century.
I am therefore selling the S&P 500 (SPY) May 2020 $300-$310 in-the-money vertical BEAR PUT spread at $9.10 or best.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done cancel your order and enter a new one decreasing your offer by 20 cents.
By coming out here you get to earn $520, or 4.60% in 6 trading days. Well done and on to the next trade. You just made money in the most difficult market in history.
This was a bet that the S&P 500 (SPY) would not trade above $300.00 by the May 15 option expiration day in 28 days. That is up a hefty 30 (SPY) points, or $2,600 Dow Average points from here.
Here are the specific trades you need to execute this position:
Sell 13 May 2020 (SPY) $310 puts at………….…...……$35.00
Buy short 13 May 2020 (SPY) $300 puts at………..….$25.90
Net Proceeds:………………………….………..………….….....$9.10
Profit: $9.10 - $8.70 = $0.40
(13 X 100 X $0.40) = $520 or 4.60% in 6 trading days.
To see how to enter this trade in your online platform, please look at the order ticket below, 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 a Vertical Bear Put Spread” by clicking here.
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.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
