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) - EXPIRATION AT MAX PROFIT
EXPIRATION of the S&P 500 (SPY) October 2022 $385-$395 in-the-money vertical bear put spread at $10.00
Closing Trade
10-21-2022
expiration date: October 21, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contracts
I think it is safe to say that with only a couple of hours of trading left, the S&P 500 is not going to rise another $13.65. So, it’s time to call this one a win.
This was a hedge against our substantial long positions this month, most of which expired at close to the maximum profit points. As a hedge fund manager, making money on both your longs AND your shorts is the gold standard and the Holy Grail. Many promise this, but almost none deliver.
We have the good fortune to have four options positions expiring at their maximum profit points at 4:00 PM today.
As a result, you get to take home $960 or 14.94% in 6 trading days. Well done and on to the next trade.
You don’t have to do anything with this expiration.
Your broker will automatically use your long position to cover your short position, canceling out the total holdings.
The entire profit will be credited to your account on Monday morning, October 24 and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
This was a bet that the S&P 500 (SPY) would not trade above $385.00 by the October 21 options expiration day in 6 trading days.
Here is the specific accounting you need to close out this position:
EXPIRATION of long 12 October 2022 (SPY) $395 puts at……$23.65
EXPIRATION of short 12 October 2022 (SPY) $385 puts at…..$13.65
Net Proceeds:………………………........................….……….….……$10.00
Profit: $10.00 - $9.20 = $0.80
(12 X 100 X $0.80) = $960 or 14.94% in 6 trading days.
