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) – SELL – STOP LOSS
SELL the S&P 500 (SPY) November 2019 $305-$310 in-the-money vertical BEAR PUT spread at $4.00 or best
Closing Trade
10-22-2019
expiration date: November 15, 2019
Portfolio weighting: 10%
Number of Contracts = 23 contracts
It looks like the S&P 500 is going to continue with my slow grind up scenario for a few more days. The downside momentum has been lost. My Mad Hedge Market Timing Index at 61 also suggests that we have another one or two weeks of upside left. Then we have the Fed meeting next week which could mark another peak.
I am therefore selling the S&P 500 (SPY) November 2019 $305-$310 in-the-money vertical BEAR PUT spread at $4.00 or best. We have massive profits to protect so I am tightening up my stop loss discipline and stopping out of positions at a 1% loss.
This was a bet that the S&P 500 (SPY) will not trade above $305.00 by the November 15 option expiration day in 23 trading days.
Here are the specific trades you need to execute this position:
SELL 23 November 2019 (SPY) $310 puts at……...…….………$9.60
Buy to cover short 23 November 2019 (SPY) $305 puts at….$5.60
Net proceeds:………………………….………............………….….....$4.00
Loss: $4.40 - $4.00 = $0.40
(23 X 100 X $0.40) = $920 or 9.09%.
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.
