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.
Tech Alert - Fortinet, Inc. (FTNT) – SELL – STOP LOSS
SELL the Fortinet, Inc. (FTNT) September 2020 $120-$125 vertical BULL call spread at $2.60
Closing Trade
9-3-2020
expiration date: September 18, 2020
Portfolio weighting: 10%
Number of Contracts = 23 contracts
Fortinet is down over 7% this morning. You knew this day was coming as tech stocks are now overvalued.
This is why we did not bet the ranch and traders should be careful at these levels. When you see Tesla and Apple rise at the pace they have been rising, then that means we can drop just as fast.
Fortinet is still a great company but a victim of tech shares in overbought territory.
If you don’t do options, stand aside.
Here are the specific trades you need to execute this position:
Sell 23 September 2020 (FTNT) $120 call at………….......………$6.55
Buy to Cover Short 23 September (FTNT) $125 call at………….$3.95
Net Proceeds:……………………..…….………..….…........................$2.60
Loss: $4.15 - $2.60 = -$1.55
(23 X 100 X -$1.55) = -$3,565 or -35.65%
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video by clicking here.
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 on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.