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 - Invesco QQQ Trust (QQQ) – SELL – TAKE PROFITS
SELL TAKE PROFITS - Invesco QQQ Trust (QQQ) June 2021 $340-$350 in-the-money vertical BEAR put spread at $9.22
Closing Trade
6-3-2021
expiration date: June 18, 2021
Portfolio weighting: 10%
Number of Contracts = 12 contracts
This was a short-term bet that Invesco QQQ Trust (QQQ) will stay BELOW $340 by the June 18th expiration and after we bought it, the trade has been at a market to market loss until this morning where the Nasdaq has experienced a sharp sell-off giving me an optimal windows to exit this position with a hard-fought profit.
I would be inclined to re-initiate this position at higher strikes prices if there is a sharp bounce following this sell-off because I still don’t think we are going to all-time highs in the Nasdaq.
I just don’t see any catalysts out there after stellar earnings reports did little to move the needle higher and factoring in already an accommodative fed, there seems to be a lack of short-term gunpowder to take us to the next level until next earnings.
Money has rotated out of technology for the time being as the reopening of the economy is supercharging other sectors to the detriment of tech.
Price action has been weak in tech lately and especially today.
It’s a worrying sign signaling that the Nasdaq hasn’t absorbed all the negative momentum yet and we won’t be making new all high time highs in the Nasdaq which ultimately was the genesis of this in-the-money bear put spread.
And what do we have in the headlines today?
Positive employment news met with a thud as price action has been negative from the opening of futures last night. Does this mean that bad news finally means bad news?
I still love the cash cow of tech like Google, Apple, Microsoft, and Facebook, but as a whole sector, tech appears to be fully priced as even sensational earnings haven’t been the catalyst to spur the next leg up.
So I executed a short-dated put spread betting that the Nasdaq will NOT make new all-time highs and we are exiting with a modest profit.
I still love technology and it will be the long-term difference makers in the economy, but the sector is in the process of being rerated.
If you don’t do options, avoid for now, but if you hold the ETF, keep it long-term.
Here are the specific trades you need to exit this position:
Sell to Close 12 June 2021 (QQQ) $350 puts at………….………$21.22
Buy to Close 12 June 2021 (QQQ) $340 puts at……........…….$12.00
Net Proceeds:…………………….....................…….………..…….....$9.22
Profit: $9.22 - $8.68 = $0.54
(12 X 100 X $0.54) = $648 or 6.21%
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.
