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 - JD.com, Inc. (JD) – SELL – STOP LOSS
SELL STOP LOSS the JD.com, Inc. (JD) May 2022 $63-$67 in-the-money vertical BEAR PUT spread at $2.70
Closing Trade
4-29-2022
expiration date: May 20, 2022
Portfolio weighting: 10%
Number of Contracts = 30 contracts
This was a tactical trade in Chinese internet platform JD.com, Inc. (JD) that JD would not rise above $63 in the next 28 days.
The Chinese economy hasn’t been this bad for 30 years and social unrest is brewing after arbitrary lockdowns have resulted in starvation and mass suicides.
The Chinese real estate market has plummeted and companies idled as China records their first death from Covid.
This mixture of terrible economic policies has shut China inc. down and Chinese stocks should be down a lot more.
But China announced stimulus this morning along with a “promise” to stop targeting Chinese tech companies.
The announcement triggered a spike in Chinese tech shares and we are exiting our position for a sizeable loss before our lower strike is taken out.
Sometimes it’s so bad it becomes good.
Here are the specific trades you need to exit this position:
Sell to Close 30 May 2022 (JD) $67 puts at…….….………$7.10
Buy to Close 30 May 2022 (JD) $63 puts at….….....…….$4.40
Net Proceeds:……………………..……...........………..…….....$2.70
Loss: $3.20 - $2.7 = $.50
(30 X 100 X $.50) = $1,500 or 15.62%
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.
