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 2022 $440-$450 in-the-money vertical bear put spread at $8.90 or best
Opening Trade
5-27-2022
expiration date: June 17, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contracts
I am going to add an additional hedge here to partially offset the 60% long position we have. I believe we have bottomed in the (SPY) for the time being but aren’t taking off for the races any time soon. We could spend months trading in this range.
With the (VIX) at $26 we can still take in a decent amount of premium income by going very deep in-the-money. And with the Fed in an aggressive tightening mode, there is always room for one more downside hedge. Even though we have risen 20 points in three days, bearishness is still rampant.
I am therefore buying the S&P 500 (SPY) June 2022 $440-$450 in-the-money vertical bear put spread at $8.90 or best.
Don’t pay more than $9.30 or you’ll be chasing.
This is a bet that the S&P 500 (SPY) will not trade above $440.00 by the June 17 option expiration day in 14 trading days.
If you don’t do options, stand aside. This is a very short-term options play only.
Here are the specific trades you need to execute this position:
Buy 12 June 2022 (SPY) $450 puts at………….………$38.00
Sell short 12 June 2022 (SPY) $440 puts at………….$29.10
Net Cost:………………………….………..……….....….….....$8.90
Potential Profit: $10.00 - $8.90 = $1.10
(12 X 100 X $1.10) = $1,320 or 12.36% in 14 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.
