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) May 2022 $365-$375 in-the-money vertical bull call spread at $8.80 or best
Opening Trade
5-9-2022
expiration date: May 20, 2022
Portfolio weighting: 10%
Number of Contracts = 11 contracts
While I believe that markets will be weak in the coming weeks, I don’t think we are in for an outright crash. Interest rates are just too low, and foreign money is still pouring into the markets, as you can see in the incredible strength of the US dollar.
We are also back in the sweet spot for adding new options spread positions with the Volatility Index (VIX) back above $34.
I am therefore buying the S&P 500 (SPY) May 2022 $365-$375 in-the-money vertical bull call spread at $8.80 or best.
Don’t pay more than $9.30 or you’ll be chasing.
To lose money on this trade, the (SPY) would have to drop below where it was in February 2021, more than a year ago.
This is a bet that the S&P 500 (SPY) will not trade below $375.00 by the May 20 options expiration day in 9 trading days.
If you don’t do options, stand aside. This is a very short-term options play only.
Here are the specific trades you need to execute this position:
Buy 11 May 2022 (SPY) $365 calls at…………....………$38.00
Sell short 11 May 2022 (SPY) $375 calls at………...….$29.20
Net Cost:………………………….………..…….….…..............$8.80
Potential Profit: $10.00 - $8.80 = $1.20
(11 X 100 X $1.20) = $1,320 or 13.63% in 9 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.
