• support@madhedgefundtrader.com
  • Member Login
Mad Hedge Fund Trader
  • Home
  • About
  • Store
  • Luncheons
  • Testimonials
  • Contact Us
  • Click to open the search input field Click to open the search input field Search
  • Menu Menu

Follow Up to Trade Alert - (SPY) May 11, 2016

Trade Alert

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.

Alert

Trade Alert - (SPY)- TAKE PROFITS

SELL the S&P 58500 SPDR?s (SPY) May, 2016 $212-$217 in-the-money vertical bear put spread at $4.83 or best

Closing Trade

5-11-2016

expiration date: May 20, 2016

Portfolio weighting: 10%

Number of Contracts = 22 contracts

I am going to use this morning?s dive in the stock market to take profits on my position in the S&P 500 SPDR?s (SPY) May, 2016 $212-$217 in-the-money vertical bear put.

This gives us a welcome 8.9% profit during a period when most traders have had their heads handed to them.

Some of you have already emailed me on why I came out of this particular (SPY) put spread among the four I had.

A 40% net short in a single asset class is a rare event for me. So I vowed to cut it back on the next down day for risk control purposes only.

The S&P 500 SPDR?s (SPY) May, 2016 $212-$217 in-the-money vertical bear put spread had the most profit to take, given that it was the furthest out-of-the-money with the shortest expiration date.

If I blow up my performance betting the ranch on a single asset class, I am too old to get my job back at Morgan Stanley.

Besides, they probably wouldn?t have me anyway.

I never believed yesterday?s frantic 220 points rally in the Dow Average for two seconds. No volume, no news, and no cross asset class confirmations meant it was not to be believed.

It was just another opportunity for the high frequency traders to pick the pockets of hedge funds by squeezing them out of their shorts, which they have been doing on a weekly basis all year.

That conviction allowed me to hang on to my aggressive 40% net short position.
?
Better yet, WE ARE POISED TO MAKE AS MUCH AS ANOTHER 10% PROFIT BY THE END OF NEXT WEEK WITH OUR REMAINING POSITIONS!

To remind you of why we are short the S&P 500 in a major way, let me refresh your memories.

It?s all about the strong dollar. A robust buck diminishes the foreign earnings of the big American multinationals, major components of the S&P 500.

I think it is much more likely that stocks grind down in coming weeks to first retest the unchanged on 2016 level at $2,043, and then the 200-day moving average at $2,012.

Share prices are anything but inspirational here.

Price earnings multiples are at all time highs at 19X. The calendar is hugely negative. Soggy and heavily financially engineered Q1 earnings reports came and went.

Huge hedge fund shorts have been covered with large losses, and no one is in a rush to jump back into the short side.

Oh, and the (SPY) is bumping up against granite like two year resistance at $210 that will take months to break through in the best case.

Did I mention that US equity mutual funds have been net sellers of stock since 2014?

This position is also a hedge against what I call ?The Dreaded Flat Line of Death? scenario. This is where the market doesn?t move at all over a prolonged period of time and no one makes any money at all, except us.

If I am right on all of this May will come in as the most profitable month for the Mad Hedge Fund Trader Trade Alert Service in more than a year. For new subscribers, your timing is perfect!

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 Vertical Bear Put Debit 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 May, 2016 (SPY) $217 puts at????.?.??$9.27

BUY to cover short 22 May, 2016 (SPY) $212 puts at.?..$4.44
Net Cost:???????????????????......$4.83

Profit: $4.83 - $4.40 = $0.43

(22 X 100 X $0.43) = $946 or 8.90% profit in 23 trading days.

?SPY

SPY 5-11-16

Burning BuildingThe Downside Protection That Worked

Share this entry
  • Share on Facebook
  • Share on X
  • Share on WhatsApp
  • Share on Pinterest
  • Share on LinkedIn
  • Share by Mail
https://www.madhedgefundtrader.com/wp-content/uploads/2016/04/Burning-Building-e1460991393740.jpg 272 400 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2016-05-11 15:59:002016-05-11 15:59:00Follow Up to Trade Alert - (SPY) May 11, 2016

tastytrade, Inc. (“tastytrade”) has entered into a Marketing Agreement with Mad Hedge Fund Trader (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade and/or any of its affiliated companies. Neither tastytrade nor any of its affiliated companies is responsible for the privacy practices of Marketing Agent or this website. tastytrade does not warrant the accuracy or content of the products or services offered by Marketing Agent or this website. Marketing Agent is independent and is not an affiliate of tastytrade. 

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.

Copyright © 2025. Mad Hedge Fund Trader. All Rights Reserved. support@madhedgefundtrader.com
  • Privacy Policy
  • Disclaimer
  • FAQ
Link to: Follow Up to Trade Alert - (USO) May 11, 2016 Link to: Follow Up to Trade Alert - (USO) May 11, 2016 Follow Up to Trade Alert - (USO) May 11, 2016 Link to: Testimonial Link to: Testimonial Testimonial
Scroll to top