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) July 2022 $410-$420 in-the-money vertical bear put spread at $9.92 or best
Closing Trade
7-1-2022
expiration date: July 15, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contracts
With 92% of the profit in hand, I am going to take the money and run on this position. In only 8 days, we managed to catch a home run of a falling stock market, falling volatility, accelerated time decay, and a rise in the Mad Hedge Market Timing Index.
Home runs are how the money is made in this business. The risk/reward of continuing is no longer favorable.
I am therefore selling the S&P 500 (SPY) July 2022 $410-$420 in-the-money vertical bear put spread at $9.92 or best.
This was a bet that the S&P 500 (SPY) would not trade above $410.00 by the July 15 options expiration day in 18 trading days. This is a very short-term options play only.
Here are the specific trades you need to close out this position:
Sell 12 July 2022 (SPY) $420 puts at…………........………$43.00
Buy to cover short 12 July 2022 (SPY) $410 puts a…….$33.08
Net Proceeds:……….………….………..……...........…….….....$9.92
Profit: $9.92 - $9.00 = $0.92
(12 X 100 X $0.92) = $1,104 or 10.22% in 8 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.
