SPY Position Update
SPY closed $128.25 on Wednesday â€“ the January position is approx. $500 in the red
SPY is priced ABOVE its current 14-day EMA (see SPY chart down below)
SPY is trading ABOVE its 20-day Bollinger Band SMA (see SPY chart)
SPY is ABOVE its 50-day simple moving average (see SPY chart)
SPY is also ABOVE its 200-day simple moving average (see SPY chart)
Relative Strength Indicator (RSI) is bullish (See SPY chart)
Moving Average Convergence/Divergence (MACD) is neutral (See SPY chart)
The December 20th Couch Potato published a January expiration month call spread
On January 18th the Couch Potato suggested closing out the entire SPY call spread for an approx. $500 loss (see tables below)
SPY Risk Analysis
January options expire at the close of business on Friday and per our ordering rules we needed to close this position.
As mentioned above we closed out all of the call contracts. The short call strike price was in the money and we did not want to take a chance on getting assigned.
As indicated in the SPY chart above, today's price action is the first significant pullback since the middle of November. Obviously, the timing is fortuitous as our call spread was deep in the hole and today's price drop gave us the opportunity to get out of the trade with minimal damage. Staying in the position longer hoping for a further drop is not wise, our strategy is to manage risk, not make risky bets.
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.