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) May 2021 $427-$432 in-the-money vertical BEAR PUT spread at $4.89 or best
Closing Trade
5-12-2021
expiration date: May 21, 2021
Portfolio weighting: 10%
Number of Contracts = 24 contracts
I am going to take advantage of the $17.00 dive in the (SPY) over the last three days to take the home run on my short in the S&P 500.
The highest Consumer Price Index in 13 years for the Consumer Price Index was absolutely what stock owners did not want to own. They are voting with their feet.
Those who added my bond (TLT) LEAPS last week made an instant killing.
With 81.67% of the maximum potential profit in hand, the risk-reward of continuing with this position is no longer favorable seven more trading days to the May 21 option expiration are no longer favorable.
I’d rather have the extra cash to roll into a better position for the June expiration on the next stock market crash.
So, I am taking the home running here and raising more cash.
I am therefore selling the S&P 500 (SPY) May 2021 $427-$432 in-the-money vertical BEAR PUT debit spread at $4.89 or best.
By coming out here, you get to take home $1,176, or 11.13% in 5 trading days.
Well done and on to the next trade!
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
This was a bet that the S&P 500 (SPY) will not trade above $428 by the May 21 option expiration day in 7 trading days. That was up 27 (SPY) points, or $2,000 Dow Average points from here.
Here are the specific trades you need to exit this position:
Sell 24 May 2021 (SPY) $432 puts at………….......………$24.00
Buy to cover short 24 May 2021 (SPY) $427 puts at…….$19.11
Net Proceeds:……………………...…….………..………….….....$4.89
Profit: $4.89 - $4.40 = $0.49
(24 X 100 X $0.49) = $1,176, or 11.13% 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.
