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 2023 $420-$430 in-the-money vertical bear put spread at $9.90 or best
Closing Trade – NOT FOR NEW SUBSCRIBERS
4-27-2023
expiration date: May 19, 2023
Portfolio weighting: 10%
Number of Contracts = 12 contracts
I received emails last night from several subscribers saying that they got out of this put spread at $9.90. With the (SPY) falling every day for the five days since we put it on, why not?
In this kind of market, you take the money and run. It’s far better to take 94.12% of the profit in five trading days than hang on for 24 days for the full 100%.
Therefore, I am selling the S&P 500 (SPY) May 2023 $420-$430 in-the-money vertical bear put spread at $9.90 or best.
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 lower your offer by 5 cents with a second order.
As a result, you get to take home $1,920, or 19.28% in 5 trading days. Well done and on to the next trade.
It's hard to see the (SPY) blasting through to a new all-time high in the next four weeks. The strong earnings reports from the banks are out, the weak earnings reports are coming.
The seasonals are about to turn harshly against the market. After reaching an unbelievable height, I expect the market to blow up, just like Elon Musk’s ill-fated Starship.
If the (SPY) does go up to $420, you will think you have died and gone to Heaven thanks to your existing long positions. Even though I am bullish long term, an extra short position here will reduce your portfolio volatility in case we get another market drawdown in the next month.
This was a bet that the S&P 500 (SPY) would not trade above $420.00 by the May 21 option expiration day in 21 trading days.
Here are the specific trades you need to close out this position:
Sell 12 May 2023 (SPY) $430 puts at……….........…………$26.00
Buy to cover short 12 May 2023 (SPY) $420 puts at…….$16.10
Net Proceeds:…………………………..................……….………$9.90
Profit: $9.90 - $8.30 = $1.60
(12 X 100 X $1.60) = $1,920, or 19.28% in 5 trading days.
If you are uncertain about how to execute an options spread, please watch my training video 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.