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, 2018 $280-$283 in-the-money vertical bear put spread at $2.98 or best
Closing Trade
5-30-2018
expiration date: June 15, 2018
Portfolio weighting: 10%
Number of Contracts = 37 contracts
This is definitely the year of taking the quick profit. A bird in hand is worth ten in the bush.
I am therefore selling my position in the S&P 500 (SPY) June, 2018 $280-$283 in-the-money vertical bear put spread at $2.98 or best.
At this price we have captured 93.33% of the maximum potential profit in the position. The risk reward of carrying on for the final 12 trading days until the June 15 expiration day is not worth it.
Coming out here you are making $1,036, or 10.37% in only six trading days. This was a nimble, opportunistic quick in and out, which is all the main market is giving us these days.
Well done and on to the next trade!
This was a bet that the (SPY) would not trade above $280 at the June 15 expiration date in 18 trading days. Today, it is trading at $270.50, miles away from the lower strike price.
Here are the specific trades you need to exit this position:
Sell 37 June 2018 (SPY) $283 puts at..........................$13.00
Buy to cover short 37 June 2018 (SPY) $280 puts at..........$10.02
Net Proceeds:............................................................$2.98
Potential Profit: $2.98 - $2.70 = $0.28
(37 X 100 X $0.28) = $1,036 or 10.37% in 6 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.