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 - (C) – SELL
SELL the Citigroup (C) October 2019 $69-$72 in-the-money vertical BEAR PUT spread at $2.60 or best
Closing Trade
10-8-2019
expiration date: October 18, 2019
Portfolio weighting: 10%
Number of Contracts = 38 contracts
We’ve got a one-point spike up in the (TLT) this morning on the back of failing China trade talks, lowering interest rates, which banks hate.
I am going to use this opportunity to back out of my short position in Citigroup (C) and reduce my risk. Gotta keep that buy low, sell high thing going.
By coming out here, I can almost guarantee that we will be up 10% for the month of October. We are too close to the $69.00 strike price to run this position eight more trading days in these incredibly volatile conditions.
I am therefore selling the Citigroup (C) October 2019 $69-$72 in-the-money vertical BEAR PUT spread at $2.60 or best.
This was a bet that the Citigroup (C) will not trade above $69.00 by the October 18 option expiration day in 11 trading days.
Here are the specific trades you need to execute this position:
Sell 38 October 2019 (C) $72 puts at……………………....…$5.40
Buy to cover short 38 October 2019 (C) $69 puts at…….$2.80
Net proceeds:………………………….………..…...……….….....$2.60
Profit: $2.60 - $2.60 = $0.00
(38 X 100 X $0.00) = $0 or 0%.
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.