As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price.
Trade Alert - (SPY)- TAKE PROFITS
Sell the S&P 500 SPDR?s (SPY) February, 2015 $199-$202 in-the-money vertical bull call spread at $2.85 or best
Closing Trade
2-12-2015
Expiration date: February 20, 2015
Portfolio weighting: 10%
Number of Contracts = 40 contracts
?Those who where quick enough to buy the S&P 500 SPDR?s (SPY) February, 2015 $199-$202 in-the-money vertical bull call spread at the market bottom at $2.51 yesterday can sell it this morning for $2.85. That is a respectable one-day profit of 34 cents, or 13.5%.
I managed to catch a one day move of $1.80 in the (SPY), as move of nearly 1%. A further turbocharger on the P&L for this position was the fall in the Volatility Index (VIX) from $17.70 down to $16.06.
As we only have five more trading days to expiration, and we are now just short in new all time highs in the (SPY), I think we are pretty safe here. So I am going to be a total pig and run this position into the expiration on Friday next week to capture the last 15 cents.
I?ll run my own P&L after the February 20 expiration.
However, if you want to take a quick one day profit, you can sell all the way down to $2.80 for this spread and it still earn some decent change.
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.
If the price of this spread has moved more than 5% by the time you receive this Trade Alert, don?t chase it. Wait for the next one. There are plenty of fish in the sea.
Here are the specific trades you need to execute this position:
Sell 40 February, 2015 (SPY) $199 calls at?????$9.10
Buy to cover short 40 February, 2015 (SPY) $202 calls at..?$6.25
Net Proceeds:??????????????????.....$2.85
Profit: $2.85 - $2.51 = $0.34
(40 X 100 X $0.34) = $1,360 or 1.36% profit for the notional $100,000 portfolio.
