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) - BUY
BUY the S&P 500 (SPY) June 2020 $315-$325 in-the-money vertical BEAR PUT spread at $9.20 or best
Opening Trade
5-8-2020
expiration date: June 19, 2020
Portfolio weighting: 10%
Number of Contracts = 11 contracts
I don’t believe the stock market is going to hit a new all-time high in the next five weeks. We have just enjoyed a steep $12, or 3% rally in the (SPY) this week, potentially setting up a double top on the charts.
Stocks are now more expensive than they were in January. Government bailout money won’t hit the economy for months. What has been handed out has been done so incompetently.
Only 6% of small companies were able to qualify for the Paycheck Protection program before it ran out of money. Some 52% of all small companies are expected to go bankrupt this year.
I am therefore buying the S&P 500 (SPY) June 2020 $315-$325 in-the-money vertical BEAR PUT spread at $9.20 or best
Don’t pay more than $9.50 or you’ll be chasing.
If you don’t do options, take a look at the ProShares Ultra Short S&P 500 ETF (SDS).
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
This is a bet that the S&P 500 (SPY) will not trade above $315.00 by the June 19 option expiration day in 29 trading days. That is up 27 (SPY) points, or $2,000 Dow Average points from here.
Here are the specific trades you need to execute this position:
Buy 11 June 2020 (SPY) $325 puts at………….………$35.00
Sell short 11 June 2020 (SPY) $315 puts at………….$25.80
Net Cost:………………………….………..………….…..........$9.20
Potential Profit: $10.00 - $9.20 = $0.80
(11 X 100 X $0.80) = $880 or 8.69% in 29 trading days.
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 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.
