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) – SELL – TAKE PROFITS
SELL the Apple (AAPL) June 2020 $320-$330 in-the-money vertical Bear Put spread at $9.00 or best
Closing Trade
4-30-2020
expiration date: June 19, 2020
Portfolio weighting: 10%
Number of Contracts = 12 contracts
This is my 51st trade alert for April, a new record. The Mad Hedge Technology Letter has issued another 15.
Given the blockbuster earnings reports from Facebook (FB) and Microsoft (MSFT) out after the close yesterday, I am going to bail on my short position in Apple.
Apple reports its own earnings after the close today and they will have a definite tailwind. The risk/reward is no good. I can always reestablish after the report and duck the risk.
I am therefore selling the Apple (AAPL) June 2020 $320-$330 in-the-money vertical Bear Put spread at $9.00 or best.
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 lower your offer by 10 cents with a second order.
This was a bet that Apple (AAPL) would not trade above $320 by the June 19 option expiration day in 36 trading days.
If you are short Apple shares, cover for a near breakeven.
Here are the specific trades you need to exit this position:
Sell 12 June 2020 (AAPL) $330 puts at…………........………$44.00
Buy to cover short 12 June 2020 (AAPL) $320 puts at…...$35.00
Net Proceeds:……………….............…….………..………….….....$9.00
Profit: $9.00 - $8.60 = $0.40
(12 X 100 X $0.40) = $480 or 2.32% in 1 trading day.
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.
