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) February 2022 $380-$390 in-the-money vertical Bull Call spread at $8.50 or best
Opening Trade
1-24-2022
expiration date: February 18, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contracts
With the Dow Average down $1,000 and the Volatility Index (VIX just short of a one-year high, it’s time to go 100% fully invested.
The S&P 500 is now down an astonishing 12.5% from the high made 12 trading days ago.
Time to buy!
Volatility is so high that you can put on spectacularly in-the-money strike prices for big, short-term profits. I am making a bet here that the (SPY) will NOT give up all of its gains in the past year in the next 19 trading days!
The (SPY) has problems of its own in that it is a particularly technology-heavy index, some 28%, which is facing unique headlines of its own, such as lofty valuations.
I am therefore buying the S&P 500 (SPY) February 2022 $380-$390 in-the-money vertical Bull Call spread at $8.50 or best
Don’t pay more than $9.20 or you’ll be chasing.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
This is a bet that the S&P 500 (SPY) will not trade below $390.00 by the February 18 option expiration day in 19 trading days. That is down $40 (SPY) points, or $3,187 Dow Average points from here. That is where the (SPY) traded a year ago.
Here are the specific trades you need to execute this position:
Buy 12 February 2022 (SPY) $380 calls at…………......………$50.00
Sell short 12 February 2022 (SPY) $390 calls at………..…….$41.50
Net Cost:………………………….………..…………..................….....$8.50
Potential Profit: $10.00 - $8.50 = $1.50
(12 X 100 X $1.50) = $1,800 or 17.64% in 19 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.
