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, 2018 $277-$280 in-the-money vertical bear put spread at $2.80 or best
Closing Trade
4-20-2018
expiration date: May 18, 2018
Portfolio weighting: 10%
Number of Contracts = 40 contracts
I'm sorry, but when the market offers you a 14.28%, or $1,400 in 5 trading days you take it, especially this market. You can take all your charts, research reports, sentiment indicators, and algorithms and toss them all in the trash.
So I am cutting my short position in the S&P 500 by half by selling the S&P 500 (SPY) May, 2018 $277-$280 in-the-money vertical bear put spread at $2.80 or best.
In any case, I have been taking substantial profits in my RISK ON positions all week, so the need for downside protection is less than it was.
This was a bet that the (SPY) would not trade above $277 at the May 18?expiration date in 25 trading days.
If you don't do options stand aside. This is a rare case where you really need the protection only available through options. I don't want to sell short the market outright here.
Here are the specific trades you need to execute this position:
Sell 40 May 2018 (SPY) $280 puts at.......................$12.10
Buy to cover short 40 May 2018 (SPY) $277 puts at...$9.30
Net Proceeds:...........................................................$2.80
Profit: $2.80 - $2.45 = $0.35
(40 X 100 X $0.35) = $1,400 or 14.28% in 5 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.
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.
