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 $380-$390 in-the-money vertical Bull Call spread at $9.80 or best
Closing Trade
1-31-2022
expiration date: February 18, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contracts
The Fed hasn’t even raised interest rates once, and the stock market is ready to spike the football (sorry 49ers fans!).
The Volatility Index (VIX) has just collapsed from $38 to $25. I have just earned $1,560 in five trading days.
And a dollar at a market top is worth $10 at a market bottom.
I am therefore selling the S&P 500 (SPY) February 2022 $380-$390 in-the-money vertical Bull Call spread at $9.80 or best
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
By coming out here you get to take home $1,560, or 17.64% in 5 trading days. Well done and on to the next trade!
This was a bet that the S&P 500 (SPY) will not trade below $390.00 by the February 18 option expiration day in 18 trading days. That was 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 exit this position:
Sell 12 February 2022 (SPY) $380 calls at…………......………$68.00
Buy to cover short 12 February 2022 (SPY) $410 calls at….$58.20
Net Proceeds:…………………….....…….………..…………......….....$9.80
Profit: $9.80 - $8.50 = $1.30
(12 X 100 X $1.30) = $1,560, or 17.64% 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.
