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) – STOP LOSS
SELL the S&P 500 (SPY) August 2021 $443-$448 in-the-money vertical BEAR PUT spread at $3.00 or best
Closing Trade
8-6-2021
expiration date: August 20, 2021
Portfolio weighting: 10%
Number of Contracts = 24 contracts
The wall of money continues to pour into the market.
The shockingly positive July Nonfarm Payroll report this morning, at 943,000 taking the headline Unemployment Rate down a half point to 5.4% puts our lower $443.00 strike price in play.
Since I have enormous 70% profits for 2021 to protect, I have no choice but to stop out. In any case, the loss here will be more than offset by our ample 50% longs in stocks and shorts in bonds.
I am therefore selling the S&P 500 (SPY) August 2021 $443-$448 in-the-money vertical BEAR PUT spread at $3.00 or best
This was a bet that the S&P 500 (SPY) would not rise above $443.00 by the August 20 option expiration day in 23 trading days.
Here are the specific trades you need to exit this position:
Sell 24 August 2021 (SPY) $448 puts at………..............….………$7.00
Buy to cover short 24 August 2021 (SPY) $443 puts at………...$4.00
Net Proceeds:………………………….............…..…………..…..….....$3.00
Loss: $4.10 - $3.00 = $1.10
(24 X 100 X $1.10) = $2,640.
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.
