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) January 2023 $420-$430 in-the-money vertical bear put spread at $9.90 or best
Closing Trade - NOT FOR NEW SUBSCRIBERS
12-27-2022
expiration date: January 20, 2023
Portfolio weighting: 20%
Number of Contracts = 25 contracts
I had intended to keep this trade all the way to the January 20 option expiration. But with 90% of the maximum potential profit in hand in only five trading days, I am going to take the money and run as an extra Christmas present. The risk/reward of continuing is no longer favorable.
Therefore, I am selling the S&P 500 (SPY) January 2023 $420-$430 in-the-money vertical bear put spread at $9.90 or best.
As a result, you get to take home $2,250, or 20.00% in only 5 trading days. Well done and on to the next trade.
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.
This was a bet that the S&P 500 (SPY) would not trade above $420.00 by the January 20 option expiration day in 20 trading days.
Here are the specific trades you need to exit this position:
Sell 25 January 2023 (SPY) $430 puts at……................….…$47.00
Buy to cover short 25 January 2023 (SPY) $420 puts at…….$37.10
Net Proceeds:………………........................………….……….………$9.90
Profit: $9.90 - $9.00 = $0.90
(25 X 100 X $0.90) = $2,250, or 20.00% in 5 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.
