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) - BUY
BUY the S&P 500 (SPY) June, 2018 $280-$283 in-the-money vertical bear put spread at $2.70 or best
Opening Trade
5-22-2018
expiration date: June 15, 2018
Portfolio weighting: 10%
Number of Contracts = 37 contracts
Up 12 out of 14 days and the stock market is starting to reach a point of exhaustion. The S&P 500 (SPY) is at the top end of a four-month trading range. In additional, we are now well into a seasonally negative period for stocks. The summer slowdown is upon us.
We have just had an onslaught of surprise good news that took us up this high. That would include China trade war going on hold, the administration free pass for sanctions busting for the multinational Chinese telecom company ZTE, and Micron Technology's (MU) announcement of a $10 billion share buyback.
So, a shot on the short side is reasonable here. However, doing ANY trade with the Volatility Index (VIX) down here at the $12 handle is a bit of a stretch.
This is a bet that the (SPY) will not trade above $280 at the June 15 expiration date in 18 trading days.
Don't pay more than $2.75 for this position or you'll be chasing.
Here are the specific trades you need to execute this position:
Buy 37 June 2018 (SPY) $283 puts at................$10.30
Sell short 37 June 2018 (SPY) $280 puts at..........$7.60
Net Cost:............................................................$2.70
Potential Profit: $3.00 - $2.70 = $0.30
(37 X 100 X $0.30) = $1,100 or 11.11% in 18 trading days
To see how to enter this trade in your online platform, please look at the order ticket above, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on How to Execute Vertical Call and Put Debit Spreads by clicking here.
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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
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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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.