Trade Alert - (SPY) August 28, 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)

Buy the S&P 500 SPDR?s (SPY) September, 2015 $207-$210 in-the-money vertical bear put spread at $2.52 or best

Opening Trade

8-28-2015

expiration date: September 18, 2015

Portfolio weighting: 10%

Number of Contracts = 39 contracts

You can pay all the way up to $2.70 for this spread and it still makes sense. If you can?t do options, buy the ProShares Ultra Short S&P 500 2X ETF (SDS) instead (click here for a full fun description at http://www.proshares.com/funds/sds.html).

In any case, I plan to be out of this baby well before the Federal Reserve interest rate decision on September 17.

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:

Buy 39 September, 2015 (SPY) $210 puts at????.??$12.60

Sell short 39 September, 2015 (SPY) $207 puts at????..?$10.08
Net Cost:?????????????????????.....$2.52

Potential Profit at expiration: $3.00 - $2.52 = $0.48

(39 X 100 X $0.48) = $1,872 or 1.87% profit for the notional $100,000 portfolio.

Legal Disclaimer

There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.