Trade Alert - (SPY) May 7, 2015
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. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen.
Trade Alert - (SPY)- BUY
Buy the S&P 500 SPDR?s (SPY) May, 2015 $212-$215 in-the-money vertical bear put spread at $2.69 or best
Opening Trade
5-7-2015
expiration date: May 15, 2015
Portfolio weighting: increase of total SPY short exposure from 20% to 30%
Number of Contracts = 37 contracts
This is your last chance to get the May options off, which expire in only six trading days.
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. Don?t even think of going outright short here.
I think the market will continue to grind sideways through the current earnings period. If we go up, it will be a slow climb of a wall of worry. We are not going to a new all time high by Friday next week, the only way you can lose money on this position.
If shares do appreciate, they will be in the small cap, currency immune Russell 2000, not the big cap multinational S&P 500 (SPY).
So there is time to take in some decent premium through buying the S&P 500 SPDR?s (SPY) May, 2015 $212-$215 in-the-money vertical bear put spread at $2.69 or best.
We only have six trading days left for these options, and the upside momentum in the market is clearly waning.
This also gives us some downside protection for our remaining one long position in Goldman Sachs (GS).
As long as the (SPY) closes below $212 on the May 15 expiration, you should keep the entire $1,147 profit from this trade.
If for some reason your broker won?t let you execute this trade on top of your existing S&P 500 SPDR?s (SPY) May, 2015 $215-$218 in-the-money vertical bear put spread, then take profits on the old position before taking a new position in the S&P 500 SPDR?s (SPY) May, 2015 $212-$215 in-the-money vertical bear put spread.
If you find any of this confusing, please email Nancy in technical support: nmilne@madhedgefundtrader.com.
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.
If the price of this spread has moved more than 5% by the time you receive this Trade Alert, don?t chase it. Wait for the next one. There are plenty of fish in the sea.
Here are the specific trades you need to execute this position:
Buy 37 May, 2015 (SPY) $215 puts at?????$7.00
Sell short 37 May, 2015 (SPY) $212 puts at..?$4.31
Net Cost:??????????????????.....$2.69
Potential Profit: $3.00 - $2.69 = $0.31
(37 X 100 X $0.31) = $1,147 or 1.15% profit for the notional $100,000 portfolio.
