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Trade Alert - (SPY) November 3, 2020 - BUY

Trade Alert

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.


Alert

 

Trade Alert - (SPY) - BUY

BUY the S&P 500 (SPY) November 2020 $360-$365 in-the-money vertical Bear Put spread at $4.50 or best

Opening Trade

11-3-2020

expiration date: November 20, 2020

Portfolio weighting: increase from 10% to 20%

Number of Contracts = 23 contracts

My post-election rally has already happened.

On Monday, traders finally saw the massive lines at the early voting sites and concluded that Biden was a slam dunk win.

As a result, the last three days have been the most profitable in the 13-year history of the Mad Hedge Fund Trader. I completely nailed it with my Biden portfolio of domestic recovery stocks and banks.

The Dow Average is now a monster $1,400 points high than the Friday low at 26,180 when I started diving into my portfolio. So, I am going to get a little cautious.

The margins in the battleground states are now tightening and the election may become a closer run thing than people realize. There seems to be a closet 4% of the electorate that are pro-Trump and completely invisible to the pollsters.

I don’t think the final outcome changes, but it could push certainty out a couple of days. Any hint that this election becomes disputed shaves an instant 1,000 points off the Dow. A hidden 4% margin might be enough for Trump to pick off a few battleground states and scare the daylights out of the market.

Besides, I don’t get to capture 1,400 points in the Dow very often.

I am therefore doubling up my position and again buying the S&P 500 (SPY) November 2020 $360-$365 in-the-money vertical Bear Put spread at $4.50 or best.

Don’t pay more than $4.70 or you’ll be chasing.

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 $360.00 by the November 20 option expiration day in 13 trading days.

Here are the specific trades you need to execute this position:

Buy 23 November 2020 (SPY) $365 puts at………….………$30.00

Sell short 23 November 2020 (SPY) $360 puts at………….$25.50

Net Cost:………………………….……….................………….….....$4.50

Potential Profit: $5.00 - $4.50 = $0.50

(23 X 100 X $0.50) = $1,150 or 11.11% in 13 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.

 

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There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.

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