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.
Trade Alert - (SPY)- BUY
Buy the S&P 500 SPDR?s (SPY) May, 2015 $215-$218 in-the-money vertical bear put spread at $2.66 or best
expiration date: May 15, 2015
Portfolio weighting: 10%
Number of Contracts = 37 contracts
You can pay all the way up to $2.75 for this spread and it still makes sense. If you can?t do the options, stand aside. Don?t even think of going outright short here.
I think the market will continue to grind sideways through the current earnings period. If we go up, it will be a slow climb of a wall of worry.
If shares do appreciate, they will be in the small cap, currency immune Russell 2000, not the big cap multinational S&P 500 (SPY).
So there is time to take in some decent premium through buying the S&P 500 SPDR?s (SPY) May, 2015 $215-$218 in-the-money vertical bear put spread at $2.66 or best.
The $215 strike also neatly matches my upside target for the first half of 2015.
In addition, this put spread partially hedges our substantial long positions in other names. As long as the (SPY) closes below $215 on the May 15 expiration in 16 trading days, you should keep the entire $1,258 profit from this trade.
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:
Buy 37 May, 2015 (SPY) $218 puts at?????$7.50
Sell short 37 May, 2015 (SPY) $215 puts at..?$4.84
Profit: $3.00 - $2.66 = $0.34
(37 X 100 X $0.34) = $1,258 or 1.26% profit for the notional $100,000 portfolio.