Trade Alert - (SPY) November 20, 2015
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)- TAKE PROFITS
SELL the S&P 500 SPDR?s (SPY) December, 2015 $185-$190 in-the-money vertical bull call spread at $4.90 or best
Closing Trade
11-20-2015
expiration date: December 18, 2015
Portfolio weighting: 10%
Number of Contracts = 22 contracts
If there is one lesson learned trading in 2015, it is never to be greedy.
Taking profits at 81% of the spread?s maximum potential value seems to be a good rule of thumb, rather that running the position into the December 18 expiration.
Besides, the S&P 500 (SPY) has moved to far, too fast, picking up $7 points, or 3.46% in only a week.
The technical trading services are now belatedly cancelling their ?SELL? signals.
The Volatility Index (VIX) back in the dumps is another reason to pull the ripcord on this successful position.
In just 5 trading days, we have seized a 9.37% profit with our position in the S&P 500 SPDR?s (SPY) December, 2015 $185-$190 in-the-money vertical bull call spread.
That is our profit at this morning?s opening mark at $4.90. The risk/reward for carrying the position for another month is no longer favorable.
Better to take the money and run. It is crucial to understand that the dry powder you will get has option value, and extra cash with which to buy the next dip.
That way, when everyone else is throwing up on their shoes, you can calmly and coolly step in and say, ?Yes, I think I?ll take some of those.?
It?s a great feeling.
Give yourself a pat on the back and move on to the next trade.
As much as I hate doing a trade on Friday the 13th, this one WAS just too good to resist.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of optionshouse.
If you are uncertain on how to execute an options spread, please watch my training video on ?How to Execute a Bull Call Spread? by clicking here at https://www.madhedgefundtrader.com/ltt-executetradealerts/. You must me logged into your account to view the video.
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:
Sell 22 December, 2015 (SPY) $185 calls at????.?.??$24.50
Buy to cover short 22 December, 2015 (SPY) $190 calls at?..$19.60
Net Proceeds:???????????????????.....$4.90
Profit: $4.90 - $4.48 = $0.42
(22 X 100 X $0.42) = $924 or 0.92% profit for the notional $100,000 portfolio
