Trade Alert - (SPY) September 20, 2018 TAKE PROFITS
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) – TAKE PROFITS
SELL the S&P 500 (SPY) September, 2018 $294-$297 in-the-money vertical bear put spread at $2.90 or best
Closing Trade
9-20-2018
expiration date: September 21, 2018
Portfolio weighting: 10%
Number of Contracts = 37 contracts
Markets are going ballistic now that they are at all-time highs. With interest rates hitting their highs for the year this is madness.
However, Mr. Market is always right.
I am therefore going to be cautious and sell the S&P 500 (SPY) September2018 $294-$297 in-the-money vertical bear put spread at $2.90 or best.
I hate leaving money on the table with only one day to expiration, but that is the prudent thing to do here. Getting caught up in an expiration gone the wrong way over a weekend is your worst nightmare.
Markets always do the thing that screw the most people and right now, that means going up.
This trade takes us to a rare 100% cash position. I will sit on my hands until I see another sweet spot open up in any asset class I can find.
This was a bet that the (SPY) would not trade above $294 at the September 21 expiration date in a mere 13 trading days.
Too bad it wasn’t 12 days.
Here are the specific trades you need to execute this position:
Sell 37 September 2018 (SPY) $297 puts at…….………$5.40
Buy to cover short 37 September 2018 (SPY) $294 puts at….$2.50
Net Proceeds:………………………….…………..…….…
Profit: $2.90 - $2.70 = $0.20
(37 X 100 X $0.20) = $740 or 7.40% 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 on How to Execute Vertical Call and Put Debit Spreads by clicking here.
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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
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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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.