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) - BUY
BUY the S&P 500 (SPY) December 2019 $297-$302 in-the-money vertical bull call spread at $4.55 or best
Opening Trade
10-3-2019
expiration date: December 20, 2019
Portfolio weighting: 10%
Number of Contracts = 22 contracts
Trump’s threat to continue the trade war with China for at least another year has triggered the biggest market selloff since August.
The Volatility Index (VIX) has soared from $11 to $18 and the Mad Hedge Market Timing Index has dumped from 92 to 61, or from extremely overbought to nearly neutral.
However, I believe there is enough support in the market to keep it from substantially falling over the next two weeks. The next thing we will hear is that the tariff increase has been postponed another three months, causing stocks to rally to new all-time highs.
Trump will do whatever he can do to eke out one more stock rally, even though it is Jay Powell’s ultra-low interest rate policy that is doing the heavy lifting.
I am therefore buying the S&P 500 (SPY) December 2019 $297-$302 in-the-money vertical bull call spread at $4.55 or best.
Don’t pay more than $4.70 or you’ll be chasing. This is a very short term 13-day yearend play.
This is a bet that the S&P 500 (SPY) will not trade below $302.00 by the December 20 option expiration day in 13 trading days. These strikes also have the additional benefit in that they have huge downside support from the 50-day moving average at $302.84.
If you don’t do options stand aside. This is a very short-term options play only.
Here are the specific trades you need to execute this position:
Buy 22 December 2019 (SPY) $297 calls at…………………$11.60
Sell short 22 December 2019 (SPY) $302 calls at………….$7.05
Net Cost:………………............………….………..………….….....$4.55
Potential Profit: $5.00 - $4.55 = $0.45
(22 X 100 X $0.45) = $990 or 9.9% in 13 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.
You must be logged into your account to view the video.
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.
