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) June 2021 $375-$385 in-the-money vertical bull call spread at $9.98 or best
Closing Trade
6-16-2021
expiration date: June 18, 2021
Portfolio weighting: 10%
Number of Contracts = 12 contracts
With only two days left until the June 18 option expiration left, we now have 98.46% of the maximum potential profit in hand. We are now up $36, or 9.35% from the upper $385 strike price.
There is a brief window after the close on Friday when your short June 18 $385 call option position can get called away, thus leaving you at risk over the weekend.
That is because the (SPY) goes ex-dividend the next day on Saturday, June 19. So, to keep you from getting picked off like this, I am coming out today to spare you from these fun and games.
I am therefore selling the S&P 500 (SPY) June 2021 $375-$385 in-the-money vertical bull call spread at $9.98 or best.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
By coming out here you get to take home a welcome $1,536 or 14.71% in 24 trading days. Well done and on to the next trade.
This was a bet that the S&P 500 (SPY) will not trade below $385 by the June 18 option expiration day in 26 trading days.
Here are the specific trades you need to close out this position:
Sell 12 June 2021 (SPY) $375 calls at…………...............………$46.00
Buy to cover short 12 June 2021 (SPY) $385 calls at………….$36.02
Net Proceeds:………………………….……............…..………….….....$9.98
Profit: $9.98 - $8.70 = $1.28
(12 X 100 X $1.28) = $1,536 or 14.71% in 24 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.