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 - (CRM) – TAKE PROFITS
SELL the Salesforce (CRM) December 2018 $105-$110 in-the-money vertical BULL CALL spread at $4.99 or best
Closing Trade
12-3-2018
expiration date: December 21, 2018
Portfolio weighting: 10%
Number of Contracts = 24 contracts
Apparently, the dinner in Buenos Aires went well. Not even Trump got food poisoning.
I am therefor going to use the 500 pop in the Dow this morning to take profits on my positions. In only 12 trading days, Salesforce has rocketed some $18 from our entry point.
The risk/reward of continuing the position for 18 more trading days to capture the last penny is not favorable.
I am therefore selling the Salesforce (CRM) December 2018 $105-$110 in-the-money vertical BULL CALL spread at $4.99 or best.
By coming out here you get to earn a generous profit of $1,776 or 17.41% in 12 trading days.
This was a chance to get back into one of the preeminent technology companies at throw away prices.
Salesforce is the dominant player in the CRM (customer relationship management) market. I expect the shares to someday double from these levels.
This is a bet that the Salesforce (CRM) will not trade below $110 by the December 21 option expiration day in 30 trading days. That was a level 32.09% down from the October high.
If you don’t do options keep the stock.
Here are the specific trades you need to exit this position:
Sell 24 December 2018 (CRM) $105 calls at………….………$40.00
Buy to cover short 24 December 2018 (CRM) $110 calls…….$35.01
Net Proceeds:…………………….…………..………….….....$4.99
Profit: $4.99 - $4.25 = $0.74
(24 X 100 X $0.74) = $1,776 or 17.41% in 12 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.
