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) January 2023 $145-$155 in-the-money vertical BEAR PUT spread at $9.00 or best
Opening Trade
12-23-2023
Expiration date: January 20, 2023
Portfolio weighting: 10%
Number of Contracts = 12 contracts
I believe the final shoe to fall in this tech wreck will be the breakdown of Apple shares, the most widely owned stock in the world. A drop to $125 is a chip shot, and as low as $100 a possibility.
I think the stock market is ready for a real shellacking in January. A 5% drop is likely, and if we get lucky, maybe 10%. The Volatility Index (VIX) should climb to at least $30. Some Cassandras are calling for a rise to $45.
By taking on an options put trade now, you get the benefit of low volatility and time decay over the extended holiday period. There is no point in passing up a sweet trade just because some guy with a white beard in a red suit is about the descend down the chimney.
And let me tell you, starting out the New Year with a big profit in your trading account is the way to go. It lets you trade from a position of strength for the rest of the year.
I don’t see any upside surprises on the horizon that could upset this position. Q4 earnings are about to be released and the sense of foreboding too palpable.
We also get an assist from the rapidly descending 200-day moving average at $150.90, which should provide major upside resistance.
I am not sure how many trading windows we are going to get in 2023, so we have to take advantage of everyone, even if it is from a ski slope.
I am therefore buying the Apple (AAPL) January 2023 $145-$155 in-the-money vertical BEAR PUT spread at $9.00 or best.
This is a bet that Apple will not rise above the $145 strike price by the January 20 options expiration date in 18 trading days.
It is also a hedge against our other substantial long positions in Tesla (TSLA).
Don’t pay more than $9.40 for this position or you’ll be chasing.
Here are the specific trades you need to execute this position:
Buy 12 January 2023 (AAPL) $155 puts at………….………$23.00
Sell short 12 January 2023 (AAPL) $145 puts at………….$14.00
Net Cost:……………………..…….………............………….….....$9.00
Potential Profit: $10.00 - $9.00 = $1.00
(12 X 100 X $1.00) = $1,200 or 11.11% in 18 trading days.
If you are uncertain about 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.
