As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price.
Trade Alert - (SPY)- BUY
Buy the S&P 500 SPDR?s (SPY) October, 2015 $204-$207 in-the-money vertical bear put spread at $2.53 or best
Opening Trade
9-18-2015
expiration date: October 16, 2015
Portfolio weighting: 10%
Number of Contracts = 39 contracts
You can pay all the way up to $2.65 for this spread and it still makes sense.
It is a bet that the (SPY) does not trade above $204 in the next 20 trading days.
Keep in mind that we have ?fast trading? conditions now, so the prices can be anywhere.
This ?RISK OFF? position will give us a nice little downside hedge for our long position in the Home Depot (HD) October, 2015 $105-$110 in-the-money vertical bull call spread.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of optionshouse.
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.
Here are the specific trades you need to execute this position:
Buy 39 October, 2015 (SPY) $207 puts at????.??$11.17
Sell short 39 October, 2015 (SPY) $204 puts at????..?$8.64
Net Cost:?????????????????????.....$2.53
Potential Profit at expiration: $3.00 - $2.53 = $0.47
(39 X 100 X $0.47) = $1,833 or 1.83% profit for the notional $100,000 portfolio
