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 - (VXX) TAKE PROFITS
SELL the IPath S&P 500 VIX Short Term Futures ETN (VXX) April, 2018 $60-$65 in-the-money vertical bear put spread at $4.98
Position closed-NOT FOR NEW SUBSCRIBERS
4-17-2018
expiration date: April 20, 2018
Portfolio weighting: 10%
Number of Contracts = 23 contracts
The Volatility Index is in free fall today, so we might as well take profits on our short volatility position.
When we added his position 11 trading days ago, it looked like the (VIX) was about to break out to a new 2018 high. Now it is being beaten like a red headed step child, hitting a one month low.
Sell high, buy low, it's amazing how well this works when you have to cajones to execute at sweet spots. If you don't have cajones of your own, I'll lend you mine, temporarily of course. It certainly worked on this trade.
This was a bet that the (VXX) would not trade above $60 at the April 20 expiration date in 14 trading days. It is currently trading at a lowly $40.65.
By coming out here you are earning a 13.18% in 11 trading days, or $1,334.
Well done, and on to the next trade!
Here are the specific trades you need to close out this position:
SELL of 23 April 2018 (VXX) $65 puts at...............$24.50
Buy to cover short 23 April 2018 (VXX) $60 puts at.......$19.52
Net Proceeds:..........................................................$4.98
Profit: $4.98 - $4.40 = $0.58
(23 X 100 X $0.58) = $1,334 or 13.18% in 11 trading days.
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.