When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Trade Alert - (SPY) - BUY
BUY the S&P 500 (SPY) August 2019 $305-$308 in-the-money vertical BEAR PUT spread at $2.53 up to $2.65
Opening Trade
8-1-2019
expiration date: August 16, 2019
Portfolio weighting: 10%
Number of Contracts = 39 contracts
Fed Governor Jay Powell has shot his wad, cutting interest rates for the first time in 12 years and indicating he is “one and done”. At least half the market was expecting that this was to be a guaranteed beginning of at least a three-rate cut cycle, and possibly more.
I believe that will take some of the heat out of the market for the short term. Don’t forget also that August has been the worst month of the year for the past decade.
It was a totally political cut. If the Fed were data-dependent as they claim, they wouldn’t have budged yesterday. We now have the most politically-driven Fed in its 106-year history.
I am therefore buying the S&P 500 (SPY) August 2019 $305-$308 in-the-money vertical BEAR PUT spread at $2.53 or best.
This is a bet that the S&P 500 (SPY) will not trade above $305 by the August 16 option expiration day in 12 trading days.
If you don’t do options, stand aside. We are close to the top of a new range and it is too late to go long or short.
Don't pay more than $2.65 or you'll be chasing.
Here are the specific trades you need to execute this position:
Buy 39 August 2019 (SPY) $308 puts at……....….…..……$7.70
Sell short 39 August 2019 (SPY) $305 puts at……...…….$5.17
Net Cost:…………………………...........………..………….….....$2.53
Potential Profit: $3.00 - $2.53 = $0.47
(39 X 100 X $0.47) = $1,833 or 18.58% in 12 trading days.
To see how to enter this trade in your online platform, please look at the order ticket above, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on How to Execute Vertical Call and Put Debit Spreads by clicking here.
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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
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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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.
