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 - (TSLA) STOP LOSS
SELL the Tesla (TSLA) November, 2017 $280-$300 in-the-money vertical Bull Call spread at $16.75 or best
Closing Trade
11-2-2017
expiration date: November 17, 2017
Portfolio weighting: 10%
Number of Contracts = 6 contracts
I can't remember the last time I dropped a bomb like this. But bombs away it it.
This is what happens when you roll the dice in an extremely overbought market.
Everyone knew that the earnings would be bad. It is the cash burn that set the cash among the pigeons, some $1.2 billion in the recent quarter.
That is the price tag for ramping up Tesla 3 production to 5,000 cars a week in the next quarter.
They are certainly spending the money.
I saw as much when I toured the Fremont factory and saw a hive of activity. Every inch of the 500,000 square foot facility was a hive of activity, as Tesla 3 parts were stacked to the 40 foot ceiling.
As much as I love the long-term future of this company, the next 11 trading days concern me.
However, the priority here is to protect my blockbuster 2017 performance.
That leaves me no choice but to stop out of my position in the Tesla (TSLA) November, 2017 $280-$300 in-the-money vertical Bull Call spread at $16.75.
This time, the hedge worked big time, greatly mitigating our losses.
Time to move on and fight another day.
Here are the specific trades you need to execute this position:
Sell 6 November, 2017 (TSLA) $280 calls at..................................$30.00
Buy to cover short 6 November, 2017 (TSLA) $300 calls at................$13.25
Net Proceeds:.................................................................................$16.75
Loss: $17.30 - $16.75 = $0.55
(6 X 100 X $0.55) = $330 or 3.18%.
To see how to enter this trade in your online platform, please look at the order ticket above, 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 Vertical Call and Put Debit Spreads by clicking here.
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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
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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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.