Make This Play on the S&P 500 for a Quick Profit Pop

|February 27, 2023

It’s the start of a new trading week, and that means it’s time to look for a new opportunity to Flip the Chart.

Instead of targeting an individual stock, we’re going to target the entire stock market, in response to some trends I see developing.

When I look at the S&P 500 based on last week’s trading, which was the worst week since December, and I see stocks closing the week up off Friday’s early session lows, I think we were seeing traders simply “monetizing the puts” that they had purchased earlier in the week.

Fast forward to today’s session, stocks opened the new week higher, and the S&P 500 is heading back toward 4,000. If we can hold above 4,000, we could see more money flow back into the market.

But that’s a big “if” – and it’s not the way I see things playing out. Given the widespread narrative of the Fed raising rates higher and holding them there for longer, I just don’t see stocks breaking out to new highs, at least not in the near-term.

The rally off of the October 2022 lows created a nice uptrending channel. Had we stayed in that channel, technically, I think we could see stocks pushing higher – but that’s not what happened.

Instead, stocks broke through that channel last week. Now, it’s going to take a lot of buying pressure to keep stocks above 4,000.

Even though we’re up in Monday’s session as I write this, I still think the bias is for stocks to trade lower.

With that said, I like buying the SPX March 29, 2023 4000/3990 Put Spread for $4.50 or less. Capture profits at 50% and exit the trade if the spread is down 50%.

That’s it – nice and simple. Keep an eye on your inbox every Monday for another trade!

Shah Gilani
Shah Gilani

Shah Gilani is the Chief Investment Strategist of Manward Press. Shah is a sought-after market commentator… a former hedge fund manager… and a veteran of the Chicago Board of Options Exchange. He ran the futures and options division at the largest retail bank in Britain… and called the implosion of U.S. financial markets (AND the mega bull run that followed). Now at the helm of Manward, Shah is focused tightly on one goal: To do his part to make subscribers wealthier, happier and more free.