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 - (GOOGL) –SELL-STOP LOSS
SELL the Alphabet (GOOGL) May 2019 $1,100-$1,130 in-the-money vertical BULL CALL spread at $23.00 or best
Closing Trade
5-13-2019
expiration date: May 17, 2019
Portfolio weighting: 10%
Number of Contracts = 4 contracts
We have just broken our upper strike price on this spread. As much as I hate to dump this position with only four days until the Friday options expiration, nothing can hold up against a general market crash.
The administration was promising us a great China trade deal on a daily basis for the past year. It didn’t happen so we have to sell.
Therefore, I am selling the Alphabet (GOOGL) May 2019 $1,100-$1,130 in-the-money vertical BULL CALL spread at $23.00 or best.
This was a bet that Alphabet (GOOGL) would not trade below $1,130 by the May 17 option expiration in 13 trading days.
Here are the specific trades you need to exit this position:
Sell 4 May 2019 (GOOGL) $1,100 calls at………….......………$37.00
Buy to cover short 4 May 2019 (GOOGL) $1,130 calls at…..$14.00
Net Proceeds:………………………….………..…………........….....$23.00
Loss: $27.00 - $23.00 = -$4.00
(4 X 100 X -$4.00) = -$1,600
To see how to enter this trade in your online platform, please look at the order ticket below, 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 a Vertical Bull Call Spread” by clicking here at
http://www.madhedgefundtrader.com/ltt-vbpds/
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 on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
