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) November 2020 $360-$365 in-the-money vertical Bear Put spread at $4.30 or best
Opening Trade
11-3-2020
expiration date: November 20, 2020
Portfolio weighting: 10%
Number of Contracts = 23 contracts
My post-election rally has already happened.
On Monday, traders finally saw the massive lines at the early voting sites and concluded that Biden was a slam dunk win.
As a result, the last three days have been the most profitable in the 13-year history of the Mad Hedge Fund Trader. I completely nailed it with my Biden portfolio of domestic recovery stocks and banks.
The Dow Average is now a monster $1,400 points higher than the Friday low at 26,180 when I started diving into my portfolio. So, I am going to get a little cautious.
The margins in the battleground states are now tightening and the election may become a closer run thing than people realize. There seems to be a closet 4% of the electorate that are pro-Trump and completely invisible to the pollsters.
I don’t think the final outcome changes, but it could push certainty out a couple of days. Any hint that this election becomes disputed shaves an instant 1,000 points off the Dow. A hidden 4% margin might be enough for Trump to pick off a few battleground states and scare the daylights out of the market.
Besides, I don’t get to capture 1,400 points in the Dow very often.
I am therefore buying the S&P 500 (SPY) November 2020 $360-$365 in-the-money vertical Bear Put spread at $4.30 or best.
Don’t pay more than $4.60 or you’ll be chasing.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
This is a bet that the S&P 500 (SPY) will not trade above $360.00 by the November 20 option expiration day in 13 trading days.
Here are the specific trades you need to execute this position:
Buy 23 November 2020 (SPY) $365 puts at………….………$29.00
Sell short 23 November 2020 (SPY) $360 puts at………….$24.70
Net Cost:………………………….……….................………….….....$4.30
Potential Profit: $5.00 - $4.30 = $0.70
(23 X 100 X $0.70) = $1,610 or 16.27% in 13 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 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.
