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) April 2022 $470-$480 in-the-money vertical BEAR PUT spread at $9.97 or best
Closing Trade
4-7-2022
expiration date: April 14, 2022
Portfolio weighting: 10%
Number of Contracts = 11 contracts
My bet that the S&P 500 was NOT going to a new all-time high in three weeks proved a good one. Since we added this position 12 trading days ago, the (SPY) has remained unchanged but is breaking the 200-day moving average once again.
Given that anything can happen in the market these days and that we have 97% of the maximum potential profit in hand, I am going to take profits. AS my late mentor Barton Biggs used to say, “Always leave the last 10% of a move to the next guy.”
I am therefore selling the S&P 500 (SPY) April 2022 $470-$480 in-the-money vertical BEAR PUT spread at $9.97 or best.
As a result, you get to take home $1,067, or 10.77% in 12 trading days.
Well done, and on to the next trade!
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
This was a bet that the S&P 500 (SPY) would not trade above $470.00 by the April 14 options expiration day in 18 trading days.
If you don’t do options, stand aside. This is a very short-term options expiration play only.
Here are the specific trades you need to close out this position:
Sell 11 April 2022 (SPY) $480 puts at…………...............………$36.00
Buy to cover short 11 April 2022 (SPY) $470 puts at………….$26.03
Net Proceeds:………………………….………..………….…................$9.97
Profit: $9.97 - $9.00 = $0.97
(11 X 100 X $0.97) = $1,067, or 10.77% in 12 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.
