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) – BUY
BUY the Boeing (BA) February 2020 $270-$280 in-the-money vertical BULL CALL spread at $9.00 or best
Opening Trade
1-21-2020
expiration date: February 21, 2020
Portfolio weighting: 10%
Number of Contracts = 11 contracts
All the bad news is out Boeing on shares, which stopped trading for a few minutes today.
The company does not expect the beleaguered 737 MAX to return to the skies in mid 2020. It is stopping production of the plane until then.
The reason the stock won’t fall any further is that competitor Airbus Industries has a four-year waiting list for planes of the same size.
I am therefore buying the Boeing (BA) February 2020 $270-$280 in-the-money vertical BULL CALL spread at $9.00 or best.
Don’t pay more than $9.40 or you’ll be chasing.
Having been a commercial pilot for most of my life and once owning a European air charter company, I have some insights into this issue.
These two crashes are not a software problem, which can be fixed in days. It is a pilot training issue. And I have been subjected to this training myself hundreds of times until I can do it blindfolded and in my sleep. Whenever you have a runaway autopilot problem, you PULL THE DAMN CIRCUIT BREAKER!
However, if you are poorly trained, as are many emerging airline pilots, and can’t remember which of the 100 circuit breakers you need to pull with a runaway autopilot, then the plane will crash. The harsh truth here is that MOST modern-day pilots can’t hand fly a plane without an autopilot.
I am therefore willing to bet that Boeing stock is not going to fall another 9.45% over the next 19 trading days. So, I am buying the Boeing (BA) February 2020 $270-$280 in-the-money vertical BULL CALL spread at $9.00 or best.
This is a bet that Boeing shares will not fall below the $280 strike price by the February 21, 2020 options expiration date. That would be a total decline of 24.7% from the recent top for one of the best run companies in America.
If you don’t do options, buy a small position the stock outright for a quick trade.
Here are the specific trades you need to execute this position:
Buy 11 February 2020 (BA) $270 calls at………….………$44.00
Sell short 11 February 2020 (BA) $280 calls at………….$35.00
Net Cost:………………........……..…….………..………….….....$9.00
Potential Profit: $10.00 - $9.00 = $1.00
(11 X 100 X $1.00) = $1,100 or 11 % in 19 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.
You must be logged into your account to view the video.
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.
