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 - (WMT) - BUY
BUY the Walmart (WMT) October 2019 $109-$112 in-the-money vertical bull call spread at $2.60 or best
Opening Trade
10-2-2019
expiration date: October 18, 2019
Portfolio weighting: 10%
Number of Contracts = 38 contracts
We’ve seen a 3.3% pullback in Walmart (WMT) since last week on recession fears. I believe the administration will start unleashing happy talk about the China trade negotiations shortly in the run-up to the supposed meeting next week to get stocks back up as it has done countless times this year.
Since Walmart has one of the highest China exposures of any company, I don’t mind adding a short-dated long position here. With the Volatility Index above $21, we are in the sweet spot for adding new options spread positions.
I am therefore buying the Walmart (WMT) October 2019 $109-$112 in-the-money vertical bull call spread at $2.60 or best.
Don’t pay more than $2.75 or the risk/reward will go against you.
This is a bet that the Walmart (WMT) will not trade below $112.00 by the October 18 option expiration day in 12 trading days.
If you don’t do options, stand aside. We are close to the top of a new range and it is too late to go long or short.
Here are the specific trades you need to execute this position:
Buy 38 October 2019 (WMT) $109 calls at………….………$7.70
Sell short 38 October 2019 (WMT) $112 calls at………….$5.10
Net Cost:…………………………...........………..………….….....$2.60
Potential Profit: $3.00 - $2.60 = $0.40
(38 X 100 X $0.40) = $1,520 or 15.38% in 12 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.
