Trade Alert – (SPY) May 21, 2025 – TAKE PROFITS – SELL

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) June 2025 $610-$620 in-the-money vertical bear put debit spread at $9.45 or best

 

Closing Trade

5-21-2025

expiration date: June 20, 2025

Portfolio weighting: 10% weighting

Number of Contracts = 12 contracts

The prospect of a House bill that could add up to $16 trillion to the national debt over the next 4-10 years has sent all asset classes into free fall, except for gold.

I am going to use today’s mini crash in the S&P 500 to take profits in my short position and reduce risk. Here we get to take home 57.7% of the maximum potential profit.

As a result, you get to take home $900 or 8.62% in 11 trading days. Well done, and on to the next trade.

While the index went against us, all of the money made here was from 11 days of time decay and a decline in options implied volatility from 20% to 15%. This is why we do vertical bear put debit spreads.

Therefore, I am selling the S&P 500 (SPY) June 2025 $610-$620 in-the-money vertical bear put debit spread at $9.45 or best.

DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.

Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and lower your offer 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 $9.45, $9.40, $9.35, and $9.30. You should get done on some or all of these.

This was a bet that the S&P 500 (SPY) would not trade above $610 in 34 trading days.

Here are the specific trades you need to close out this position:

Sell 12 June 2025 (SPY) $620 puts at…………………………..$37.00

Buy to cover short 12 June 2025 (SPY) $610 puts at……….$27.55

Net Proceeds:………………………….………………………………….$9.45

Profit: $9.45 – $8.70 = $0.75

(12 X 100 X $0.75) = $900 or 8.62% in 11 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.