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) August 2019 $305-$308 in-the-money vertical BEAR PUT spread at $2.98 or best
Closing Trade
8-5-2019
expiration date: August 16, 2019
Portfolio weighting: 10%
Number of Contracts = 39 contracts
This was a total home run of a trade, going out seconds before Trump announced his next escalation of the trade war with China. We caught nearly a 20-point plunge in the (SPY) in only two trading days. It is conditions like this where hedge funds shine. As a result, we clocked a 17.79% profit in only two trading days, which I am inclined to take.
The risk/reward of continuing here is no longer favorable. We are approaching levels in the market that might generate some kind of support, the January high. I want to have dry powder so I can sell into any future sharp rallies.
I am therefore selling the S&P 500 (SPY) August 2019 $305-$308 in-the-money vertical BEAR PUT spread at $2.98 or best. If you can’t get this price, keep cutting your price until you are done.
This was a bet that the S&P 500 (SPY) will not trade above $305 by the August 16 option expiration day in 12 trading days.
Here are the specific trades you need to exit this position:
Sell 39 August 2019 (SPY) $308 puts at…………..........………$21.00
Buy to cover short 39 August 2019 (SPY) $305 puts at....….$18.02
Net Proceeds:………………………….………..………….…...............$2.98
Profit: $2.98 - $2.53 = $0.45
(39 X 100 X $0.45) = $1,755 or 17.78% in 2 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.
