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 - (UNP) TAKE PROFITS
SELL the Union Pacific (UNP) September, 2017 $100-$102 in-the-money vertical BULL CALL spread at $1.97 or best
Closing Trade
9-8-2017
expiration date: September 15, 2017
Portfolio weighting: 10%
Number of Contracts = 57 contracts
One reason I am sending this Trade Alert out now, instead of capturing the accelerated time decay over the weekend, is that I know that many of you won't be able to access your computers on Monday, thanks to Hurricane Irma.
It looks like we have another three-day home run on our hands.
Using current prices, we can now reap 88.00% of the maximum potential profit. The remaining three cents of the position are time value until theSeptember 15 options expiration day.
Therefore, the risk/reward for this position in no longer favorable, with only five trading days until expiration.
If things suddenly go wrong, there is not enough time for them to go right again.
We earned a welcome 12.57% on this trade in only 3 trading days in this position.
As I expected, Union Pacific (UNP) conducted a major breakout two weeks ago, and blasted through to a new 2017 high. After we picked up our position, it just kept on running.
This was a bet that the (UNP) wouldn't move below $102 over the 10 trading days, compared to the then current $104.22.
As I write this, the (UNP) is trading at $106.58. or up 2.26%.
If you didn't do options and bought the (UNP) outright, keep them. I think the prospects for the shares of railroads for the rest of 2017 are excellent.
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 on How to Execute a Vertical Bull Call Spread by clicking here at
http://members.
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.
If it doesn't get done, then bump up your bid for the spread by a few cents.
The difference between the bid and the offer on these deep in-the-money spread trades can be enormous. You are trying to buy your own yacht with this trade, not your broker's.
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.
Here are the specific trades you need to execute this position:
Sell 57 September, 2017 (UNP) $100 calls at...................................$6.85
Buy to cover short 57 September, 2017 (UNP) $102 calls at............$4.88
Net Proceeds:.......................................................................................$1.97
Profit: $1.97 - $1.75 = $0.22
(57 X 100 X $0.22) = $1,254 or 12.57% in 3 trading days.
