Trade Alert – (SPY)- TAKE PROFITS
SELL the SPDR S&P 500 (SPY) May, 2017 $242-$245 in-the-money vertical bear put spread at $2.94 or best
Closing Trade-NOT FOR NEW SUBSCRIBERS
5-9-2017
Expiration Date: May 19, 2017
Portfolio Weighting: 10%
Number of Contracts = 38 contracts
Now that we have made a marginal new high in the S&P 500, I am going to take profits on my short position in the SPY. We could grind up a few more bucks from here.
Time to take the money and run.
I am therefore selling my position in the SPDR S&P 500 (SPY) May, 2017 $242-$245 in-the-money vertical bear put spread at $2.94 or best.
With only eight trading days to expiration, we have captured 84.62% of the maximum potential profit.
A 12.64% profit in only seven trading days is welcome any time.
I can trade up markets and down market. But markets that don’t move at all are the hardest kind of all to trade.
The Volatility Index (VIX) crash here is concerning. What always follows a crash? A huge rally.
Risk in the markets is therefore very high.
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 about how to execute this options spread, please watch my training video “How to Execute a Vertical Bear Put Debit Spread”.
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 with only eight days to expiration.
Please keep in mind these are ballpark prices at best. After the text alerts go out, prices can be all over the map. There is no telling how much the market will have moved by the time you get this email.
Paid subscribers, be sure you’ve signed up for our FREE text service for Trade Alerts. When seconds count, this feature offers a definite trading advantage. In today’s volatile markets, individual investors need every advantage they can get.
Here Are the Specific Trades You Need to Execute This Position:
Sell 38 May, 2017 SPY $245 puts at…….……..……$5.40
Buy to cover short 38 May, 2017 SPY $242 puts at.….$2.46
Net Proceeds:………………………………………………$2.94
Profit: $2.94 – $2.61 = $0.33
(38 X 100 X $0.33) = $1,254 or 12.64% profit in seven trading days.
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ABOUT THE AUTHOR
The Diary of a Mad Hedge Fund Trader is written by John Thomas, one of the founding fathers of the modern hedge fund industry.
Seeing the incredible inefficiencies and severe mis-pricing offered by the popping of multiple bubbles during the Great Crash of 2008, and missing the adrenaline of the marketplace, he returned to active hedge fund management. With The Diary of a Mad Hedge Fund Trader, his goal is to broaden public understanding of the techniques and strategies employed by the most successful hedge funds so that they may more profitably manage their own money.
John graduated from the University of California at Los Angeles (UCLA) with a degree in biochemistry and a minor in mathematics in 1974. He moved to Tokyo, Japan to join a Japanese securities house as a research analyst, becoming fluent in Japanese. In 1976 he was appointed the Tokyo correspondent for The Economist magazine and the Financial Times. For the next seven years he published thousands of articles about the economies, companies, and leaders of Asia. He was one of the first American correspondents to cover China during the Cultural Revolution.