Trade Alert – (SPY) September 11, 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)

Buy to cover the short position in the S&P 500 SPDR (SPY) September, 2012 $145-$150 Call Spread at $0.61 or best

Closing Trade

9-11-2012

expiration date: 9-21-2012

Portfolio weighting: 10% = 60 Contracts

We are getting too close to the strikes and the expiration of the S&P 500 SPDR (SPY) September, 2012 $145-$150 Call Spread, to continue running this position. It would be a shame to be up 23% on the year, only to blow a substantial portion of those profits on a lousy at-the-money short call spread.

My gut tells me that this short position will expire worthless at its maximum profit point on September 21. Am I willing to bet my performance for the year, especially now that I am in the top 0.1% of all hedge fund managers? Hell No!

I regret to report that this is my first loss in 26 Trade Alerts. I obviously am not working hard enough and will strive to do better. After the close today, I shall flagellate myself, pour salt into my wounds, and wear a hair shirt for the rest of the month. Hopefully, I will heal by the time you see me at my next strategy luncheon.

These are the trades you should execute:

Buy to cover short 60 September, 2012 (SPY) $145 calls at……$0.65
Sell 60 September, 2012 (SPY) $150 calls at…………….……….$0.04
Net Cost:……………………………………………………………$0.61

Net Loss = $0.61 – $0.33 = $0.28

(60 X 100 X $0.28) = $1,680, or 1.68% loss for the notional $100,000 portfolio for a one month position.

Time to Run and Hide!

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