Trade Alert – (SPY) August 13, 2012

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)

Close the short position in the S&P 500 SPDR (SPY) August, 2012 $143-$147 Call Spread at $0.05 or best

Closing Trade

8-13-2012

expiration date: 8-17-2012

Portfolio weighting: 5%

($5,000/100/$0.05) = 30 Contracts

These are the trades you should execute:

BUY the August, 2012 (SPY) $143 calls at………..…$0.06
SELL the August, 2012 (SPY) $147 calls at………….$0.01
Net Cost:…………………………………………..…………………$0.05

Net Profit: ($0.27 – $0.05) = $0.22

(30 X 100 X $0.22) = $660, or 0.66% profit for the notional $100,000 portfolio for a 4 trading day position.

We have taken out 81% of the profit in this position in just 4 trading days. Traders are crushing market volatility with short volatility trades. So the risk/reward on carrying this trade is no longer favorable. Take the money and run.

This is my tenth consecutive closing profitable trade alert. The game here is to win with a lot of bunts and singles rather than swing for the fences. The volatility is just not there. With this closing we still have our remaining short volatility trade in the short September $147-$153 call spread. The premium we take in with this will offset the losses we are taking on our long $138-$132 put spread.