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)- BUY
Buy the S&P 500 SPDR?s (SPY) September, 2015 $171-$176 in-the-money vertical bull call spread at $4.11 or best
expiration date: September 18, 2015
Portfolio weighting: 10%
Number of Contracts = 24 contracts
You can pay all the way up to $4.50 for this spread and it still makes sense. If you can?t do options, buy the S&P 500 shares outright for a long-term hold.
It is a bet that the (SPY) does not trade below $175.11 in the next 18 trading days. That is 7.4% below here, and 18.2% below the recent high. It is even $7 points below the October, 2014 crash low, the number we are clearly trading against.
Keep in mind that we have ?fast trading? conditions now, so the prices can be anywhere.
With the Volatility Index (VIX) peaking at $53, I?ll take that as a ?BUY? signal. With volatility this high, trades that are seemingly impossible can get done. This is one of those ?Mission Impossibles.?
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:
Buy 24 September, 2015 (SPY) $171 calls at????.??$20.14
Sell short 24 September, 2015 (SPY) $176 calls at????..?$16.03
Potential Profit at expiration: $5.00 – $4.11 = $0.89
(24 X 100 X $0.89) = $2,136 or 2.14% profit for the notional $100,000 portfolio.
?It Seems Impossible, But it Can Be Done