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 - (AAPL) STOP LOSS
SELL the Apple (AAPL) February, 2018 $165-$170 in-the-money vertical BULL CALL spread at $3.10 or best
Closing Trade
1-26-2018
expiration date: February 16, 2018
Portfolio weighting: 10%
Number of Contracts = 25 contracts
We got double snake bit on this trade.
First, the European Community announced a $1.25 billion antitrust fine against Apple's chip supplying partner, QUALCOM (QCOM). Then Apple got hit by a raft of analyst downgrades for second quarter iPhone sales.
The third nail in the coffin for this trade was a presidential comment that he favored a strong dollar. This has the unfortunate effect of immediately devaluing about half of Apple's earnings an accounted for the $3 plunge we got on Thursday.
As I prefer to dig out a small hole instead of a deep one I am going to limit my losses here and stop out of my position in the Apple (AAPL) February, 2018 $165-$170 in-the-money vertical BULL CALL spread at $3.10 or best.
I believe this is not more than a temporary dip in the shares, so if you have them, keep them. I am just not certain how the options will perform over the next 15 trading days.
Here are the specific trades you need to exit this position:
Sell 25 February 2018 (AAPL) $165 calls at................................$8.50
Buy to cover short 25 February 2018 (AAPL) $170 calls at...................$5.40
Net Proceeds:.......................................................................................$3.10
Loss: $5.00 - $4.10 = -$0.90
(25X 100 X -$0.90) = -$2,250 or -22.50%.
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.
