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 - (HD) – BUY
BUY the Home Depot (HD) March 2020 $210-$220 in-the-money vertical Bull Call spread at $8.70 or best
Opening Trade
3-5-2020
expiration date: March 20, 2020
Portfolio weighting: 10%
Number of Contracts = 11 contracts
With the Dow Average down a staggering 855 points, of course, you can only look at long plays today.
With the Volatility Index (VIX) at a sky-high $36, the risk/reward of going back into a call spread has been greatly improved.
I believe that Home Depot shares will reach $300 sometime in 2020, out the other side of the Corona pandemic. The shares have just dipped by $35 to $212.50 and then bounce back hard.
Housing is booming, as is home improvement, and the sector just received a new turbocharger from sub 1% interest rates. Home Depot is half of a duopoly and is far more efficient than competitor Lowes (LOW).
In other words, you don’t get a better long side entry point than this.
Not only that, with the Mad Hedge Market Timing Index at 10 level, down from 95, it's 2020 low, we are at the bottom end of an eight-month range.
I am therefore buying the Home Depot (HD) March 2020 $210-$220 in-the-money vertical Bull Call spread at $8.70 or best
This is a bet that Home Depot (HD) will not trade below $220 by the March 20 option expiration day in 11 trading days.
Don’t pay more than $9.50 for this position or you’ll be chasing.
If you don’t do options, BUY THE SHARES for a great long-term investment.
Here are the specific trades you need to execute this position:
Buy 11 March 2020 (HD) $210 calls at………….………$29.00
Sell short 11 March 2020 (HD) $220 calls at………….$20.30
Net Cost:………….....…………..…….………..………….….....$8.70
Potential Profit: $10.00 - $8.70 = $1.30
(11 X 100 X $1.30) = $1,430 or 14.94% in 11 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.
Be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today's market, investors need every advantage they can get.
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.
