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) October 2022 $385-$395 in-the-money vertical bear put spread at $9.90 or best
Closing Trade
10-11-2022
expiration date: October 21, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contracts
I am going to use today’s dive to new lows to take profits on my short position in the S&P 500. With 92.3% of the maximum potential profit in hand, the risk/reward of continuing is no longer favorable.
Even though I am turning bullish long term, an extra short position here reduced your portfolio volatility in case we get another market drawdown in the 14 trading days, which we did big time.
Therefore, I am selling the S&P 500 (SPY) October 2022 $385-$395 in-the-money vertical bear put spread at $9.90 or best.
As a result, you get to take home $1,440, or 13.79% in 6 trading days. Well done and on to the next trade.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and lower your offer by 5 cents with a second order.
This was a bet that the S&P 500 (SPY) would not trade above $385.00 by the October 21 options expiration day in 14 trading days.
Here are the specific trades you need to close out this position:
Sell 12 October 2022 (SPY) $395 puts at…..........…………..…$39.00
Buy to cover short 12 October 2022 (SPY) $385 puts at…….$29.10
Net Proceeds:…………………………..................……….……………$9.90
Profit: $9.90 - $8.70 = $1.20
(12 X 100 X $1.20) = $1,440, or 13.79% in 6 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.
