Trade Alert – (SPY) August 5, 2025 – BUY

When John identifies a strategic exit point, he will send you an alert with specific trade information on 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) August 2025 $645-$650 in-the-money vertical bear put debit spread at $4.50 or best

Opening Trade

8-5-2025

expiration date: August 15, 2025

Portfolio weighting: 10% weighting

Number of Contracts = 12 contracts

What really threw the fat on the fire on Friday was the Nonfarm Payroll Report for June, which came in at a weak 73,000. What really set people’s hair on fire was the downward revisions for May and June of an incredible 258,000, the worst since the Pandemic. That sets job growth so far for 2025 at near zero.

Those of us who hang on to every economic data release like life preservers are not surprised by the revisions. It made no sense that every other data point was going to hell in a handbasket while the government jobs data held up mysteriously well. All that has happened is that the jobs data has come in line with everything else.

The delays in reporting might be ascribed to the Bureau of Labor Statistics losing 75% of its staff this year. The head of the Bureau, Dr. Erika McEntarfer, was fired anyway, the same day by tweet, for essentially telling the truth and relaying numbers from the 50 states. This does not augur well for the reliability of future data on which we investors base decisions.

Suddenly, investors were confronted with a reversal in an economy that was growing modestly to one that was shrinking dramatically. The glass has gone from half full to half empty. Strategists are going to start revising down year-end stock market targets as fast as they revised them up in the spring. I told a financial advisor friend of mine the other day to enjoy his vacation in Michigan because he is going to have to work very hard to earn his crust of bread when he gets home.

I thought we got off cheaply with a mere $159.63 point, or a 2.3% plunge in the S&P 500 on Friday. Worse will come in the weeks ahead. It sets up a long-awaited test of the 50-day moving average at $5,863 at a minimum, down 8.39%, and the 200-day moving average at $4,800, the worst, down 25%, in case things really get out of control….again. The high for August is almost certainly in place, and possibly the high for the year.

Therefore, I am buying the S&P 500 (SPY) August 2025 $645-$650 in-the-money vertical bear put debit spread at $4.50 or best.

DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.

Do not pay more than $4.70, or you will be chasing

Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and increase your bid by 10 cents with a second order.

If you don’t want to sit in front of a screen all day or live in a foreign time zone when the US stock market is closed, such as Australia, or don’t want to sit in front of a screen all day, simply enter a spread of Good-Until-Cancelled orders overnight, like $4.50, $4.55, $4.60, and $4.70. You should get done on some or all of these.

This is a bet that the S&P 500 (SPY) will not trade above $645 in 8 trading days.

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

Buy 25 August 2025 (SPY) $650 puts at………………….…..$22.00

Sell short 25 August 2025 (SPY) $645 puts at………………$17.50

Net cost:………………………….……………………………………….$4.50

Potential Profit: $5.00 – $4.50 = $0.50

(25 X 100 X $0.50) = $1,250 or 11.11% in 8 trading days

 

 

 

 

If you are uncertain about 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.