Trade Alert - (SPY) May 6, 2016
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) May, 2016 $195-$198 in-the-money vertical bull call spread at $2.69 or best
Opening Trade
5-6-2016
expiration date: May 20, 2016
Portfolio weighting: 10%
Number of Contracts = 37 contracts
You can pay all the way up to $2.75 for this spread and it still makes sense.
If you can?t do the options, stand aside. It?s too early to go outright long this market.
The S&P 500 SPDR?s (SPY) May, 2016 $195-$198 in-the-money vertical bull call spread is a bet that the (SPY) won?t fall below $198 in ten trading days, or off 3.2% from here.
Basically, if we don?t crash within two weeks you will max out the potential profit with this trade.
If the April nonfarm payroll disappointment of 160,000 can?t knock the markets down, then its flat or up small for the next few weeks.
Call this my hedge against the dreaded ?flat line of death,? where you get no net movement over a prolonged period of time, much like we saw one year ago. This is where the markets fails to either collapse or rally substantially, the most difficult market of all to trade.
As I argued vociferously at the February 11 bottom, yield support is underpinning stocks in a huge way, frustrating the hell out of short sellers, market timers, and hedge funds everywhere.
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 Bull Call 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 37 May, 2016 (SPY) $195 calls at????.?.??$9.80
Sell short 37 May, 2016 (SPY) $198 calls at.???.?..$7.11
Net Cost:???????????????????..$2.69
Potential Profit: $3.00 - $2.69 = $0.31
(37 X 100 X $0.31) = $1,147 or 11.52% profit in 10 trading days.
