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) – BUY
Buy the Apple (AAPL) June 2020 $320-$330 in-the-money vertical Bear Put spread at $8.60 or best
Opening Trade
4-29-2020
expiration date: June 19, 2020
Portfolio weighting: 10%
Number of Contracts = 12 contracts
I am going to keep with my buy low, sell high philosophy.
So, I am going to use the incredible five-week 6,800-point rally in the Dow Average to reestablish my short in Apple. During this period, Apple shares have risen by an eye-popping 38%.
Say thanks to the still-elevated level of the Volatility Index (VIX), which is still at an extremely high $31.42.
As much as I love Apple for the long term, I don’t believe that we are going to a new all-time high in the next month.
And now we are also in the enviable position in that any short positions in the stock market are hedged by our put options in the (VXX).
Apple’s stores in the US are closed, its factories shut down, and the customers are locked up in quarantine. It’s definitely not an environment to sell more iPhones.
We already know that the September launch of its new generation of 5G phones is postponed. We just don’t know by how long.
In other words, you don’t get a better short side entry point than this.
I am therefore buying the Apple (AAPL) June 2020 $320-$330 in-the-money vertical Bear Put spread at $8.60 or best
Don’t pay more than $9.20 or you will be chasing.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and increase your bid by 20 cents with a second order.
This is a bet that Apple (AAPL) will not trade above $320 by the June 19 option expiration day in 36 trading days.
If you don’t do options, you can sell Apple shares short for a quick opportunistic $10 or $20 of downside.
Here are the specific trades you need to execute this position:
Buy 12 June 2020 (AAPL) $330 puts at………….…..……$45.00
Sell short 12 June 2020 (AAPL) $320 puts at…………...$36.40
Net Cost:……………………..…….…........……..………….….....$8.60
Potential Profit: $10.00 - $8.60 = $1.40
(12 X 100 X $1.40) = $1,680 or 16.28% in 36 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.
You must be logged into your account to view the video.
Things to Keep in Mind
Remember, 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.
