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 2019 $300-$305 in-the-money vertical BEAR PUT spread at $4.55 or best
Closing Trade
10-7-2019
expiration date: October 18, 2019
Portfolio weighting: 10%
Number of Contracts = 25 contracts
Going into the China trade talks which could deliver an upside surprise, I am going to take the easy money here. A profit of $1,250 or 12.34% in 4 trading days is nothing to sneeze at.
I am therefore buying S&P 500 (SPY) October 2019 $300-$305 in-the-money vertical BEAR PUT spread at $4.55 or best.
This was a bet that the S&P 500 (SPY) will not trade above $300.00 by the October 18 option expiration day in 13 trading days.
If you don’t do options, stand aside. This is a very short-term options play only.
Here are the specific trades you need to execute this position:
Sell 25 October 2019 (SPY) $305 puts at…………........………$11.70
Buy to cover short 25 October 2019 (SPY) $300 puts at…….$7.15
Net proceeds:………………………….………..…………..........….....$4.55
Profit: $4.55 - $4.05 = $0.50
(25 X 100 X $0.50) = $1,250 or 12.34% in 4 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 on How to Execute Vertical Call and Put Debit Spreads by clicking here.
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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
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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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.
