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) – TAKE PROFITS
Sell the S&P 500 (SPY) October 2022 $410-$420 in-the-money vertical bear put spread at $9.90 or best
Closing Trade
9-27-2022
expiration date: October 21, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contracts
We now have 91.6% of the maximum potential profit in this trade. The risk reward to carry it for another month to capture the last ten cents is not worth it.
Not only are we a humongous $42 points in-the-money from our nearest strike price. We also caught a $7 rise in the Volatility Index (VIX).
Therefore, I am selling the S&P 500 (SPY) October 2022 $410-$420 in-the-money vertical bear put spread at $9.90 or best.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and lower your offer by 5 cents with a second order.
This was a bet that the S&P 500 (SPY) would not trade above $410.00 by the October 21 options expiration day in 24 trading days.
Here are the specific trades you need to close out this position:
Sell 12 October 2022 (SPY) $420 puts at……….................…$61.00
Buy to cover short 12 October 2022 (SPY) $410 puts at…….$51.10
Net Proceeds:………………………….…......................…….………$9.90
Profit: $9.90 - $8.80 = $1.10
(12 X 100 X $1.10) = $1,320 or 12.50% in 24 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.
