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 - (BA) – TAKE PROFITS
SELL the Boeing (BA) April 2019 $315-$335 in-the-money vertical BULL CALL spread at $19.80 or best
Closing Trade – NOT FOR NEW SUBSCRIBERS
4-1-2019
expiration date: April 18, 2019
Portfolio weighting: 10%
Number of Contracts = 6 contracts
We have managed to capture a health $19 move in Boeing (BA) stock to the upside in only ten trading days. As a result, our call spread on Boeing options is approaching its maximum profit point.
At current prices, we have captured 91.30% of the maximum potential profit. The risk/reward of continuing with the position is no longer favorable. In addition, the share price is rapidly approaching the 50-day moving average where it may pause. I want dry powder so I can dive back into Boeing on the next adverse shock or surprise.
So, I am selling the Boeing (BA) April 2019 $315-$335 in-the-money vertical BULL CALL spread at $19.80 or best. If you can’t get done at this price then wait a day or two and it will be there.
The truth is that the technological and cost advantages of the Boeing 737 Max are so enormous that airlines can’t compete without them. That explains why Boeing has a ten-year, 4,636 plane orderbook for the plane. Boeing has to fix this problem or there will be NO aircraft industry.
This was a bet that Boeing shares would not fall below the $335 strike price by the April 18 options expiration date. Well done and on to the next trade.
If you bought a position the stock outright for a quick trade, keep it.
Here are the specific trades you need to execute this position:
Sell 6 April 2019 (BA) $315 calls at……………….………$74.00
Buy to cover short 6 April 2019 (BA) $335 calls at………….$54.20
Net Proceeds:………………..…….………..………….….....$19.80
Profit: $19.80 - $17.70 = $2.10
(6 X 100 X $2.10) = $1,260 or 11.86% in 10 trading days.
To see how to enter this trade in your online platform, please look at the order ticket above, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on How to Execute Vertical Call and Put Debit Spreads by clicking here.
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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
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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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.
