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.
BUY the Apple (AAPL) March 2020 $285-$295 in-the-money vertical Bull Call spread at $9.00 or best
Opening Trade
2-18-2020
expiration date: March 20, 2020
Portfolio weighting: 10%
Number of Contracts = 11 contracts
I believe that Apple shares will reach $400 sometime in 2020. The shares have just dipped by $10 to $315 in the wake of the company tossing its Q1 earnings guidance, thanks to the Coronavirus-induced economic slowdown in China.
Apple’s stores in the Middle Kingdom are closed, its factories shut down, and the customers are locked up in quarantine. It’s definitely not an environment to sell more iPhones.
In other words, you don’t get a better long side entry point than this. To see the shares down only $10 in the wake of this worst-case scenario shows how strong the underlying bid for Apple is.
Not only that, with the Mad Hedge Market Timing Index at 52 level, it's 2020 low, we are at the bottom end of a three-month range. The new trading range seems to be 50-95 in this massively overstimulated market.
I am therefore buying the Apple (AAPL) March 2020 $285-$295 in-the-money vertical Bull Call spread at $9.00 or best.
This is a bet that Apple (AAPL) will not trade below $295 by the March 20 option expiration day in 23 trading days.
Don’t pay more than $9.50 for this position or you’ll be chasing.
If you don’t do options, stand aside. If you already own Apple shares, which you almost certainly do if you read this newsletter, just keep them.
Here are the specific trades you need to execute this position:
Buy 11 March 2020 (AAPL) $285 calls at………….………$34.50
Sell short 11 March 2020 (AAPL) $295 calls at………….$25.50
Net Cost:……………………..…….........………..………….….....$9.00
Potential Profit: $10.00 - $9.00 = $1.00
(11 X 100 X $1.00) = $1,100 or 11.11% in 23 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.
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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.
