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) August 2020 $480-$490 in-the-money vertical Bear Put spread at $9.00 or best
Opening Trade
8-7-2020
expiration date: August 21, 2020
Portfolio weighting: 10%
Number of Contracts = 11 contracts
Having picked up Apple at $10 a share during the 2009 crash, it really has been some ride. The stock is now more overheated than at any time over the last 20 years. During this time, the price earnings multiple has risen from 9X to an eye-popping 33X.
If corona cases peak out for the short term, we are due for another rotation from big tech to the recovery stocks. In fact, the entire market is overbought.
I am therefore buying the Apple (AAPL) August 2020 $480-$490 in-the-money vertical Bear Put spread at $9.00 or best.
Don’t pay more than $9.50 or you will be chasing.
I love Apple for the long term, and I believe we are going to break to new highs in the coming months. We are on the eve of 5G iPhones, which will become the greatest moneymaker of all time.
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 10 cents with a second order.
This is a bet that Apple (AAPL) will not trade above $480 by the August 21 option expiration day in 9 trading days.
Here are the specific trades you need to execute this position:
Buy 11 August 2020 (AAPL) $490 puts at………….…...……$47.00
Sell short 11 August 2020 (AAPL) $480 puts at…………...$38.00
Net Cost:……………………..…….………..………….............….....$9.00
Potential Profit: $10.00 - $9.00 = $1.00
(11 X 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.
