Follow Up to Trade Alert - (SPY) February 2, 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. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen.
Follow Up to Trade Alert - (SPY) UPDATE
Sell the S&P 500 SPDR?s (SPY) February, 2015 $189-$194 in-the-money vertical bull call spread at $4.32 or best
Closing Trade
2-2-2015
expiration date: February 20, 2015
Portfolio weighting: 10%
Number of Contracts = 25 contracts
At this morning?s opening bell, we were greeted with the unmistakable evidence the stock market is technically breaking down.
The Dow Average has broken its three-year upward sloping trend line. Market leading sectors, like Consumer Discretionary and Financials have all put in eminently convincing ?Head and Shoulders? tops (click here). More distressingly, the head and shoulders for lead sector Technology has already broken down. Check out all the charts below.
I quickly ran my expiration P&L this morning. I figured out that if I sold all my longs for small profits (SPY), (IWM), and kept all my short positions (FXY), (T), (AA), I would be up 4.43% year to date by mid February, which in this environment is nothing less than heroic. The exception to the analysis is my sale of Linn Energy (LINE), which will be the subject of my next piece.
For more detail on why this is happening, read today?s letter, ?The Great American Rot is Ending? by clicking here).
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.
If the price of this spread has moved more than 5% by the time you receive this Trade Alert, don?t chase it. Wait for the next one. There are plenty of fish in the sea.
Here are the specific trades you need to execute this position:
Sell 25 February, 2015 (SPY) $189 calls at?????$11.72
Buy to cover short 25 February, 2015 (SPY) $194 calls at..?$7.40
Net Cost:??????????????????.....$4.32
Profit: $4.32 - $4.00 = $0.32
(25 X 100 X $0.32) = $800 or 0.80% profit for the notional $100,000 portfolio.
