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 - (PYPL) – TAKE PROFITS
SELL the PayPal (PYPL) December 2018 $72-$77 in-the-money vertical BULL CALL spread at $4.95 or best
Closing Trade
12-13-2018
expiration date: December 21, 2018
Portfolio weighting: 10%
Number of Contracts = 22 contracts
You don’t get instant winners very often in a market that has fallen off a cliff. But we got one nonetheless with our PayPal position, which has gone up in a straight line since we strapped it on four days ago.
In this market, you don’t let positions grow hair on them lest they instantly disappear, thanks to an out of the blue presidential comment or tweet.
I am therefore selling the PayPal (PYPL) December 2018 $72-$77 in-the-money vertical BULL CALL spread at $4.95 or best
By coming out here you get to earn a nifty $990, or 10% in only 4 trading days. It’s not worth keeping the position for five more days into the December 21 option expiration for only five cents.
This was a chance to get back into one of the preeminent technology companies at throwaway prices.
PayPal is the top online financial transaction processors on the internet and is making major strides replacing old line legacy banks. It is a lot like Square (SQ), but with less volatility.
With the Mad Hedge Market Timing Index then at 12, there was nearly a 100% chance that this will be a successful trade.
This was a bet that the PayPal (PYPL) will not trade below $77.00 by the December 21 option expiration day in 14 trading days.
If you don’t do options, keep the stock. This is a great level to own one of the top performing technology stocks in the market.
Here are the specific trades you need to exit this position:
Sell 22 December 2018 (PYPL) $72 calls at………….………$16.25
Buy to cover short 22 December 2018 (PYPL) $77 calls at…$11.30
Net Profits:………………………….…………..………….….....$4.95
Profit: $4.95 - $4.50 = $0.45
(22 X 100 X $0.45) = $990 or 10% in 4 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.
Be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today's market, investors need every advantage they can get.
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.
