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) - BUY
BUY the S&P 500 (SPY) May 2020 $300-$310 in-the-money vertical BEAR PUT spread at $8.70 or best
Opening Trade
4-7-2020
expiration date: May 15, 2020
Portfolio weighting: 10%
Number of Contracts = 13 contracts
Some 2,400 points in two days has taken the (SPY) to wildly overbought conditions given the dire conditions ahead of us.
I am therefore buying the S&P 500 (SPY) May 2020 $300-$310 in-the-money vertical BEAR PUT spread at $8.70 or best
Don’t pay more than $9.20 or you’ll be chasing.
If you don’t do options, take a look at the ProShares Ultra Short S&P 500 ETF (SDS).
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
This is a bet that the S&P 500 (SPY) will not trade above $300.00 by the May 15 option expiration day in 28 days. That is up a hefty 43 (SPY) points, or $3,600 Dow Average points from here.
Here are the specific trades you need to execute this position:
Buy 13 May 2020 (SPY) $310 puts at………….…..……$42.00
Sell short 13 May 2020 (SPY) $300 puts at…….…….$33.30
Net Cost:………………………….………..………….......….....$8.70
Potential Profit: $10.00 - $8.70 = $1.30
(13 X 100 X $1.30) = $1,690 or 14.94% in 28 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.