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) September 2022 $445-$455 in-the-money vertical bear put spread at $9.95 or best
Closing Trade
8-29-2022
expiration date: September 16, 2022
Portfolio weighting: 10%
Number of Contracts = 11 contracts
I think it is safe to call this trade a win. Since we added this position 12 trading days ago, the S&P 500 has shed $32 points, or 7.4%. The Volatility Index (VIX) has rocketed from $19 to $28.
With 95% of the maximum potential profit in hand, the risk/reward of carrying this position for 14 more trading days is no longer favorable. Also, I prefer to go 100% into cash for September, which promises to deliver the next major low for this market.
Therefore, I am selling the S&P 500 (SPY) September 2022 $445-$455 in-the-money vertical bear put spread at $9.95 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 $1,045 or 10.55% in 12 trading days. Well done and on to the next trade.
This was a bet that the S&P 500 (SPY) would not trade above $445.00 by the September 16 options expiration day in 25 trading days.
Here are the specific trades you need to exit this position:
Sell 11 September 2022 (SPY) $455 puts at……........……….…$52.00
Buy to cover short 11 September 2022 (SPY) $445 puts at….$42.05
Net Proceeds:………………………….……….…................…….….....$9.95
Profit: $9.95 - $9.00 = $0.95
(11 X 100 X $0.95) = $1,045 or 10.55% 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.
