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 - (MSFT) –STOP LOSS
SELL the Microsoft (MSFT) May 2021 $230-$240 in-the-money vertical Bull Call spread at $7.70 or best
Closing Trade
5-12-2021
expiration date: May 21, 2021
Portfolio weighting: 10%
Number of Contracts = 12 contracts
This is my first stop loss in four months.
The highest Consumer Price Index in 13 years for the Consumer Price Index was absolutely what technology stock owners did not want to own. They are voting with their feet.
Those who added my bond LEAPS last week already offset this loss with their instant killing. Short bonds turned out to be the perfect tech hedge.
I am therefore selling the Microsoft (MSFT) May 2021 $230-$240 in-the-money vertical Bull Call spread at $7.70 or best.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait for five minutes, and if you don’t get done, cancel your order and lower your offer by 10 cents with a second order.
This was a bet that Microsoft (MSFT) will not trade below $240 by the May 21 option expiration day in 12 trading days.
Here are the specific trades you need to exit this position:
Sell 12 May 2021 (MSFT) $230 calls at……….....….………$12.00
Buy to cover short 12 May 2021 (MSFT) $240 calls at…..$4.30
Net Proceeds:………………..…….………..……........…….….....$7.70
Profit: $9.30 -$7.70 = -$1.60
(12 X 100 X -$1.60) = -$1,920.
If you are uncertain about 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.
