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) – TAKE PROFITS
SELL the S&P 500 (SPY) May 2021 $430-$440 in-the-money vertical BEAR PUT spread at $9.90 or best
Closing Trade
5-11-2021
expiration date: May 21, 2021
Portfolio weighting: 10%
Number of Contracts = 12 contracts
With 88.88% of the maximum potential profit in hand, the risk/reward of continuing to the May 21 option expiration in 8 trading days is no longer favorable.
I’d rather have the extra cash to roll into a better position for the June expiration. There is also an overall de-risking going on which I am happy to participate in. It’s about time that traders are reminded that stock can go down as well as up.
By coming out here, you are able to take home $960, or 8.79% in 6 trading days. Well done and on to the next trade!
This position acted as a nice hedge for any remaining long positions in stocks you may have had.
This makes 57 out of 59 of this year’s trade alerts profitable. The last 33 consecutive trade alerts have been profitable, a new record.
I am therefore selling the S&P 500 (SPY) May 2021 $430-$440 in-the-money vertical BEAR PUT spread at $9.90 or best
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
This is a bet that the S&P 500 (SPY) would not trade above $430 by the May 21 option expiration day in 14 trading days. That was up 27 (SPY) points, or $2,000 Dow Average points from here.
Here are the specific trades you need to exit this position:
Sell 12 May 2021 (SPY) $440 puts at…………......... .………$28.00
Buy to cover short 12 May 2021 (SPY) $430 puts at……….$18.10
Net Proceeds:………………………….………..…….......…….….....$9.90
Profit: $9.90 - $9.10 = $0.80
(12 X 100 X $0.80) = $960, or 8.79% in 6 trading days.
If you are uncertain about how to execute an options spread, please watch my training video by clicking here.
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.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
