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) ? STOP LOSS
Sell the S&P 500 (SPY) May, 2014 $189-$192 in-the-money bear put spread at $2.10 or best
expiration date: May 16, 2014
Portfolio weighting: 10%
Number of Contracts = 45 contracts
Risk control is the name of the game right here. This was a 2% winner yesterday. Now it is a small loser. Better keep it that way. Selling on Mondays certainly has been a bad idea. One big hickey is enough this year!
As long as whipsaws continue in a narrow range it is tough to make money in this market. However, I am happy to keep the (VXX), as our entry point is so close to a mathematical floor for this ETF.
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.
Keep in mind that these are ballpark prices only. Spread pricing can be very volatile on expiration months farther out.
Here are the specific trades you need to execute this position:
Sell 45 May, 2014 (SPY) $192 puts at?????$4.61
Buy to cover short 45 May, 2014 (SPY) $189 puts at..??.$2.51
Loss: $2.20 – $2.10 = -$0.10
(45 X 100 X -$0.10) = -$450 or -0.45% loss for the notional $100,000 portfolio.