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 - (AAPL) – SELL-STOP LOSS
SELL the Apple (AAPL) April 2020 $250-$260 in-the-money vertical Bull Call spread at $8.70 or best
Closing Trade
4-21-2020
expiration date: April 24, 2020
Portfolio weighting: 10%
Number of Contracts = 11 contracts
Special Note: This is a one-week vertical bull call spread only
We are approaching our upper strike price in this call spread, and my risk control is tighter than usual. For some reason, they are hammering tech stocks today and I don’t want any part of it.
I am therefore selling the Apple (AAPL) April 24, 2020 $250-$260 in-the-money vertical Bull Call spread at $8.50 or best. If the stock keeps going down, the risk/reward of this trade will turn sharply against us.
Fortunately, the loss on this trade will be more than offset by our substantial short positions in the (SPY), the (SDS) and (FB). By coming out here, we get to live to fight another day.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and lower your offer by 20 cents with a second order.
This was a bet that Apple (AAPL) would not trade below $260 by the April 24 option expiration day in only five trading days.
Here are the specific trades you need to exit this position:
Sell 11 April 24, 2020 (AAPL) $250 calls at………….......………$18.00
Buy to cover short 11 April 24, 2020 (AAPL) $260 calls at…...$9.30
Net Proceeds:……………...…….………..……….................….….....$8.70
Loss: $9.00 - $8.70 = -$0.30
(11 X 100 X -$0.30) = -$330.
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.
Things to Keep in Mind
Remember, 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.
