Trade Alert - (SPY) May 16, 2018 TAKE PROFITS
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) September 2018 $255 puts outright at $3.75 or best
Closing Trade
5-16-2018
expiration date: September 21, 2018
Portfolio weighting: 5%
Number of Contracts = 15 contracts
The market still stubbornly wants to hold in here, despite its elevated level. The Volatility Index (VIX) has failed to follow through with a spike, despite the fact that the tech heavy NASDAQ in particular is a risk of putting in a "head and shoulders" top on the charts.
So, I am going to take a small profit here and SELL the S&P 500 (SPY) September, 2018 $255 puts outright at $3.75 or best. These puts traded as high as $4.45 yesterday, put such is the value of 20/20 hindsight. These things move fast.
When these outright long dated options positions immediately go your way they are great. When they don't, they are horrible. Remember, even with a small 15 contract, or $5,000 position you have exposure to $382,500 with of the S&P 500.
By coming out here I am going to book my first positive numbers here for May. I'll be generating a 10.29%, or $525 profit in only two trading days, taking our year to date gain up to 19.83%.
Sell 15 X September 2018 (SPY) $255 puts at............$3.75
Profit: $3.75 - $3.40 - $0.35, or 10.29% in 2 trading days.
($0.35 X 15 contracts X 100) = $525
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.