Here is how I use the Main Model Signals service and the Buy/Sell Signals and VP levels that he supplies.
This past week the S&P-500 rallied, hit, broke-down through different Sell Signals and VP Levels as price moved all around.
When the S&P-500 rallied to a VP Level and failed to stay above it, I bought PUT option debit Spreads . . . Buying one strike price and selling another strike price 2-SP-points lower . . thereby locking in a $200 per spread Max Profit should the Signal be correct (which his Signals usually are) .. OR .. just a small Gain if the Signal is wrong and the S&P-500 moves higher.
The key is that I am Buying 2.00 SP-points (212-210 and 209-207 in my actual trades below) for only about 1.50 SP-points . . on near-to-expiration options. By buying these PUT Spreads (Down-profiters) on Rallies (Up moves), I get the spread for a nicely discounted price. Since both options in my position are already In-The-Money at the time of purchase … I only have to manage moves against me (higher) as the S&P-500 price approaches my short strike-price .. thereby putting the 2-point spread in danger. Since I do this with about one-week left until the expiration of my short position, this rarely happens that the S&P-500 would move up so much in just one week. I do these PUT spreads in Down-trending Markets and the opposite (CALL spreads) in Up-trending Markets.
This is a snapshot of my actual trades over this past week:
- Buying the spread for $137 per contract then 5-days later selling it for $190 per contract = 38% in 5-days
- Buying the spread for $146 per contract then the next day selling it for $194 per contract = 32% in 1-day
Notice that I am not Greedy and I Close the position NEAR the max profit of $200 per contract . . happy with that and not trying to wait for the last dollar of Profit and potentially lose my nice gains.
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