SPY ETF Trade Setup
Stock prices slid today and we will do a few simple trade adjustments to manage our risk. The 15 minute and daily charts will be used for analysis.
We are closing out the July
expiration short call, AND rolling our June
quarterly expiration put spread out to July.
SPY closed at $104.21 on Tuesday
We are closing out the short call for an approx. $800 profit (see tables below)
Our SPY June quarterly put spread expires tomorrow and the price is right at the $104 short strike. Notice in the 15 minute SPY chart below how the price held above $104 at the close. As confirmed in the daily chart this has been the support level since the beginning of the year. Obviously it is very risky to wait to see if prices recover, therefore tomorrow we plan on closing out the initial Bull Put spread for an approx. $100 loss and following up with a TRADE ADJUSTMENT to roll the put spread to July expiration (see tables below)
After the trade adjustment the bull put spread(s) should be approx. $700 in the black
DIA ETF Trade Setup
Yesterday's Couch Potato trade update recommended a DIA put spread selling the July expiration $97 strike and purchasing the $92. Today's stock slide could have potentially made this a bad trade. Fortunately, the market gapped down at the open and this was a signal to hold off on the original trade and re-evaluate. Similar to the SPY above, the DIA 15 min. chart confirms the price held at the support level that has been firm since the beginning of the year.
After the DIA price gapped down and found a bottom we revised our put spread trade as indicated in the tables below
As mentioned yesterday, we are putting a short leash on our put spreads by tightening up the stop-loss point. If prices pull back and the put spreads display an unearned loss equal to the premium we received, then we will probably exit the position and call it even.
Couch Potato Trader Disclaimer
All results reported in this section are hypothetical. While the numbers represented here may have been achieved or beaten by our readers, we make no representation that any individual investor achieved these exact results. The tracking for the plays listed in this section uses closing prices for the day the newsletter is published and it is not meant to imply that any reader actually received those prices (though many often do) or participated in these recommendations (even though many do). The portfolio represented here is hypothetical and for investment education purposes only. It is only an illustration of what type of gains a knowledgeable trader might receive utilizing these strategies. If you don't get close to these results, guess what. It isn't the fault of the strategies.