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
?RISK OFF?
Buy the S&P 500 SPDR?s (SPY) October, 2015 $203-$206 in-
the-money vertical bear put spread at $2.36 or best
Opening Trade
9-21-2015
expiration date: October 16, 2015
Portfolio weighting: 10%
Number of Contracts = 42 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 $203 in the next 19 trading days.Keep in mind that we have ?fast trading? conditions now, so the prices can be anywhere.
The technical picture seems to be deteriorating by the day. After obviously failing at the 200 day moving average at $203, the (SPY) is now obligated the test the August 24 flash crash lows.
The question now becomes ?Will the August lows hold, or do we break to new lows and establish a downtrend, creating a bear market.
I don?t think we are going into a new bear market, as the economic data reports are still too strong. But the volatility until we prove that point in the meantime could be extreme.
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 42 October, 2015 (SPY) $206 puts at????.??$10.40
Sell short 42 October, 2015 (SPY) $203 puts at???..?$8.04
Net Cost:???????????????????.....$
Potential Profit at expiration: $3.00 - $2.36 = $0.64
(42 X 100 X $0.64) = $2,688 or 2.69% profit for the notional $100,000 portfolio.
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Time For Some Downside Protection
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