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) April, 2016 $208-$213 in-the-money vertical bear put spread at $4.45 or best
expiration date: April 15, 2016
Portfolio weighting: 10%
Number of Contracts = 22? contracts
You can pay all the way up to $4.60 for this spread and it still makes sense.
This is a bet that the (SPY) trades at or below $208 at the April 15 expiration in 13 trading days.
Janice Yellen has basically shot her wad here, essentially promising no interest rate hikes until December with her comments in front of the New York Economic Club today.
Look no further than her laser focused words like ?great gradualism?, less favorable economic conditions?, ?weaker foreign economies? and ?downward drifting inflation expectations.?
However she is saying all this with stocks at their most overbought condition in history, with a staggering 92.5% of stocks trading over their 50-day moving average.
I?m not expecting another crash here, just a minor correction, or a slow grind sideways.
If you can?t do the options, buy the ProShares Short S&P 500 Short Fund ETF (SH) (click here for the prospectus at http://www.proshares.com/funds/sh.html), or the ProShares Ultra Short S&P 500 Short Fund 2X ETF (SDS) (click here for the prospectus at http://www.proshares.com/funds/sds.html).
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of optionshouse.
If you are uncertain on how to execute an options spread, please watch my training video on ?How to Execute a Vertical Bear Put Debit Spread? by clicking here at https://www.madhedgefundtrader.com/ltt-executetradealerts/. You must me logged into your account to view the video.
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 22 April, 2016 (SPY) $213 puts at????.?.??$9.40
Sell short 22 April, 2016 (SPY) $208 puts at.????..$4.95
Potential Profit: $5.00 – $4.45 = $0.55
(22 X 100 X $0.55) = $1,210 or 12.36% profit in 13 trading days.
Time for Some Downside Protection