When John identifies a strategic exit point, he will send you an alert with specific trade information on 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) – SELL – STOP LOSS
SELL the S&P 500 (SPY) February 2024 $485-$490 in-the-money vertical Bear put debit spread at $2.80 or best
Closing Trade
1-22-2024
expiration date: February 16, 2024
Portfolio weighting: 20%
Number of Contracts = 50 contracts
The melt-up continues, and I was premature to hedge my substantial technology longs with a hedge in the short S&P500 (SPY). Get out of the way of a runaway bull!
This is the largest single loss in the 15-year history of the Mad Hedge Trade Alert Service, even though it will be more than offset by profits in other positions.
I am therefore selling the S&P 500 (SPY) February 2024 $485-$490 in-the-money vertical Bear put debit spread at $2.80 or best.
This was a bet that the S&P 500 would not rise above $485 by the February 16 option expiration in 20 trading days.
Here are the specific trades you need to close out this position:
Sell 50 February 2024 (SPY) $490 puts at………….…........……$8.50
Buy to cover short 50 February 2024 (SPY) $485 puts at…....$5.70
Net Proceeds:………………………….………..……….......................$2.80
Loss: $4.40 - $2.80 = $1.60
(50 X 100 X $1.60) = $8,000.
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.
