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 2022 $370-$380 in-the-money vertical bull call spread at $9.60 or best
Closing Trade
5-13-2022
expiration date: May 20, 2020
Portfolio weighting: 10%
Number of Contracts = 11 contracts
With the kind of extreme volatility that we have, you take what profits you can. Since yesterday’s low, the Dow Average has bounced an impressive 1,200 points. Time to take the money and run.
I am therefore selling the S&P 500 (SPY) May 2022 $370-$380 in-the-money vertical bull call spread at $9.60 or best.
By coming out here you get to take home $880 or 9.09% in 13 trading days. That is 66.67% of the maximum potential profit on the trade. Well done and on to the next trade!
To lose money on this trade, the (SPY) would have to drop below it was in February 2021, more than a year ago.
This was a bet that the S&P 500 (SPY) would not trade below $380.00 by the May 20 option expiration day in 18 trading days.
Here are the specific trades you need to execute this position:
Sell 11 May 2022 (SPY) $370 calls at…………...............………$31.00
Buy to cover short 11 May 2022 (SPY) $380 calls at………….$21.55
Net Proceeds:………………………….………..…..........……….….....$9.45
Profit: $9.60 - $8.80 = $0.80
(11 X 100 X $0.80) = $880 or 9.09% in 13 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.
