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) February 2022 $480-$500 in-the-money vertical BEAR PUT spread at $19.60 or best
Closing Trade
1-24-2022
expiration date: February 18, 2022
Portfolio weighting: 10%
Number of Contracts = 6 contracts
With the Dow Average down $1,000 and the Volatility Index (VIX just short of a one-year high, it’s time to take profits on my most extreme oversold positions. That way I can ring the cash register again with new underpriced longs.
The S&P 500 is now down an astonishing 12.5% from the high made 12 trading days ago. It has already hit my worst-case scenario downside target presented at my Wednesday, January 19 global strategy webinar.
Time to buy!
I am therefore selling the S&P 500 (SPY) February 2022 $480-$500 in-the-money vertical BEAR PUT spread at $19.60 or best
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 $480.00 by the February 18 option expiration day in 25 trading days. That was up 12 (SPY) points, or $932 Dow Average points from there.
Here are the specific trades you need to close out this position:
Sell 6 February 2022 (SPY) $500 puts at……..............…….………$72.00
Buy to cover short 6 February 2022 (SPY) $480 puts at………….$52.40
Net Proceeds:……….....………….……….....................………….….....$19.60
Profit: $19.60 - $17.00 = $2.60
(6 X 100 X $2.60) = $1,560 or 15.29% in 7 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.
