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.
BUY the S&P 500 (SPY) October 2021 $410-$420 in-the-money vertical BULL CALL spread at $9.00 or best
Opening Trade
9-17-2021
expiration date: October 15, 2021
Portfolio weighting: 10%
Number of Contracts = 11 contracts
We managed to rally the Volatility Index just above of $20 this morning off the back of a 2.2% drop in the S&P 500. This has been the first decent entry point for a long in a month. The peak by the Volatility Index above $20 gives us our chance.
We are coming off of extreme overbought conditions, especially in technology stocks. In any case, selling off on spectacular earnings reports has become a regular part of this market.
My existing September long in the (SPY) is expiring today at its maximum profit. I am therefore replacing it with the same position in the October expiration.
The wall of money is still there, and in fact, it is growing.
I am therefore buying the S&P 500 (SPY) October 2021 $410-$420 in-the-money vertical BULL CALL spread at $9.00 or best
Don’t pay more than $9.40 or the risk/reward is not worth it.
This is a bet that the S&P 500 (SPY) will not fall below $420 by the October 15 option expiration day in 20 trading days.
Here are the specific trades you need to execute this position:
Buy 11 October 2021 (SPY) $410 calls at……...…….………$35.00
Sell short 11 October 2021 (SPY) $420 calls at…………...$26.00
Net Cost:………………………….………..........……………..….....$9.00
Potential Profit: $10.00 - $9.00 = $1.00
(11 X 100 X $1.00) = $1,100 or 11.00% in 23 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.
