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.
Trade Alert – (SPY)- BUY
Buy the S&P 500 SPDR?s (SPY) October, 2015 $201-$204 in-the-money vertical bear put spread at $2.38 or best
expiration date: October 16, 2015
Portfolio weighting: 10%
Number of Contracts = 39 contracts
You can pay all the way up to $2.60 for this spread and it still makes sense.
It is a bet that the (SPY) does not trade above $201 in the next 14 trading days.
Keep in mind that we have ?fast trading? conditions now, so the prices can be anywhere.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of optionshouse.
If you are uncertain on how to execute an options spread, please watch my training video on ?How to Execute a Bull Call Spread? by clicking here: https://www.madhedgefundtrader.com/ltt-executetradealerts/
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.
Here are the specific trades you need to execute this position:
Buy 39 October, 2015 (SPY) $204 puts at????.?.??$9.40
Sell short 39 October, 2015 (SPY) $201 puts at????..?$7.02
Potential Profit at expiration: $3.00 – $2.38 = $0.62
(39 X 100 X $0.62) = $2,418 or 2.42% profit for the notional $100,000 portfolio