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 - (FB) - BUY
BUY the Facebook (FB) August 2020 $290-$300 in-the-money vertical Bear Put spread at $9.00 or best
Opening Trade
8-10-2020
expiration date: August 21, 2020
Portfolio weighting: 10%
Number of Contracts = 11 contracts
This cycle of covid-19 infections is imminently going to peak out and start declining, at least for the short term.
As a result, I believe the core long FANG trade that has been driving markets this year is long overdue for a break. Instead, I think we are about to witness a major rotation into domestic economic “recovery” stocks. The indexes will keep going up, but the leadership will change. Bonds and gold are also due for profit taking.
I believe that Facebook (FB) shares are overbought in the extreme, and that there is some nice cherry picking to be had.
I am therefore buying the Facebook (FB) August 2020 $290-$300 in-the-money vertical Bear Put spread at $9.00 or best.
Don’t pay more than $9.50 or you’ll be chasing.
If you don’t do options stand aside. This is a short term options play only.
This is a bet that Facebook shares will NOT rise above $290 by the August 21 option expiration date in 9 trading days.
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.
Here are the specific trades you need to execute this position:
Buy 11 August 2020 (FB) $300 puts at……...………$40.00
Sell short 11 August 2020 (FB) $290 puts at……….$31.00
Net Cost:………………………….…………........…….….....$9.00
Potential Profit: $10.00 - $9.00 = $1.00
(11X 100 X $1.00) = $1,100 or 11.11% in 9 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 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.
