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 $280-$290 in-the-money vertical Bull Call spread at $8.90 or best
Opening Trade
10-30-2020
expiration date: November 20, 2020
Portfolio weighting: 10%
Number of Contracts = 12 contracts
Here is my election play.
No matter who wins the election, interest rates are still near zero, the Fed is still flooding the financial system with cash, and massive stimulus is about to hit the economy.
This is still a liquidity-driven bull market.
For the first time in seven months, my Mad Hedge Market Timing Index has finally entered BUY territory at 28.
With the Volatility Index (VIX) over $40, it is almost impossible to lose money on a short-dated deep-in-the-money call spread.
Stocks are now down 9.8% from their market highs. That is not a bad initial long side entry point. This position also gets huge support from the 200-day moving average at $310.29.
I am therefore buying the S&P 500 (SPY) November 2020 $280-$290 in-the-money vertical Bull Call spread at $8.90 or best.
Don’t pay more than $9.20 or you’ll be chasing.
If you don’t do options, just buy the (SPY) outright for a bounce.
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 below $290.00 by the November 20 option expiration day in 15 trading days.
Here are the specific trades you need to execute this position:
Buy 12 November 2020 (SPY) $280 calls at………...………$46.00
Sell short 12 November 2020 (SPY) $290 calls at………….$37.10
Net Cost:………………………….………..………..............….….....$8.90
Potential Profit: $10.00 - $8.90 = $1.10
(12 X 100 X $1.10) = $1,320 in 15 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.
