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 the SPDR S&P 500 (SPY) March, 2014 $189-$192 bear put spread at $2.67 or best
expiration date: March 21, 2014
Portfolio weighting: 10%
Number of Contracts = 37 contracts
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the trade to come to you. The middle market is the halfway point between the bid and the offered prices that you see on your screen with your online broker.
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 especially on expiration months farther out.
Here are the specific trades you need to execute this position:
Buy 37 March, 2014 (SPY) $192 puts at??.????$7.24
Sell short 37 March, 2014 (SPY) $189 puts at??..?..$4.57
Profit at expiration: $3.00 – $2.67 = $0.33
(37 X 100 X $0.33) = $1,221 or 1.22% profit for the notional $100,000 portfolio.