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) September, 2018 $294-$297 in-the-money vertical bear put spread at $2.70 or best
Opening Trade
9-4-2018
expiration date: September 21, 2018
Portfolio weighting: 10%
Number of Contracts = 37 contracts
The risk/reward for the market is terrible right now. If markets rise you might be able to eke out another 1% in gains this month. If they fall, you could get clocked for 10%.
The number of things that could potentially go wrong now are almost uncountable. If you have been reading Global Trading Dispatch on a regular basis you already know what they are.
Only one thing can go right and that is a continuing expansion of excess global liquidity because of Europe and Japanese monetary policy.
And it has to do this in September, historically the worst trading month of the year.
I am therefore going to be cautious and at a small short dated position andbuy the S&P 500 (SPY) September, 2018 $294-$297 in-the-money vertical bear put spread at $2.70 or best.
This increases our total positions to a very conservative 35%.
This is a bet that the (SPY) will not trade above $294 at the September 21 expiration date in a mere 13 trading days.
Don’t pay more than $2.80 for this position or you’ll be chasing.
If you don’t do options stand aside.
This is a rare case where you really need the protection only available through options. I don’t want to sell short the market outright here.
Here are the specific trades you need to execute this position:
Buy 37 September 2018 (SPY) $297 puts at…….………$8.80
Sell short 37 September 2018 (SPY) $294 puts at……….$6.10
Net Cost:………………………….…………..…….…....
Potential Profit: $3.00 - $2.70 = $0.30
(37 X 100 X $0.30) = $1,100 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 on How to Execute Vertical Call and Put Debit Spreads by clicking here.
You must be logged into your account to view the video.
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.
Be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today's market, investors need every advantage they can get.
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.
