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) March 2022 $470-$480 in-the-money vertical BEAR PUT spread at $9.85 or best
Closing Trade
2-18-2022
expiration date: March 18, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contracts
We have just captured 89.28% of the maximum potential profit in this position in a mere five days. That amounts to $25 points on the downside in the (SPY).
We now have a case of holding nine birds in hand versus one in the bush. There is no point in running this position for another month for a miniscule 15 cents.
I am therefore selling the S&P 500 (SPY) March 2022 $470-$480 in-the-money vertical BEAR PUT spread at $9.85 or best.
As a result, you get to take home $1,500, or 14.53% in 5 trading days. Well done and on to the next trade!
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
This was a bet that the S&P 500 (SPY) would not trade above $470.00 by the March 18 option expiration day in 24 trading days. That is up 22 (SPY) points from here.
Here are the specific trades you need to close out this position:
Sell 12 March 2022 (SPY) $480 puts at………….......…….…$48.00
Buy to cover short 12 March 2022 (SPY) $470 puts at…….$38.15
Net Proceeds:…………….……...............………..…………..….....$9.85
Profit: $9.85 - $8.60 = $1.25
(12 X 100 X $1.25) = $1,500, or 14.53% 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.
