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 - (TLT) – TAKE PROFITS
SELL the Apple (AAPL) February 2022 $180-$190 in-the-money vertical Bear Put spread at $9.40 or best
Closing Trade
2-4-2022
expiration date: February 18, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contracts
The only threat to my near-perfect trading record this year is my short position in Apple (AAPL). A spectacular earnings report has moved the shares from the bottom to the top of its range.
That has taken us to within $8.00 of our lower $180 strike price in this position with ten days to run until the February 18 options expiration. That is slightly more risk than I am willing to run.
By coming out here we still get to reap 57.14% of the maximum potential profit. We also get to cash in on the decline in the Volatility Index (VIX) from $26 to $23.
I love Apple for the long term.
The fact is that Apple is considered the safest stock in the market.
I am therefore selling the Apple (AAPL) February 2022 $180-$190 in-the-money vertical Bear Put spread at $9.40 or best.
As a result, you get to take home $960, or 9.30% in 11 trading days. Well done and on to the next trade.
This was a bet that Apple would not rise above $180 by the February 18 option expiration.
Here are the specific trades you need to close out this position:
Sell 12 February 2022 (AAPL) $190 puts at………............….….......……$17.00
Buy to cover short 12 February 2022 (AAPL) $180 puts at…….......……$7.60
Net Proceeds:……………………................…….……........…..………….….....$9.40
Profit: $9.40 - $8.60 = $0.80
(12 X 100 X $0.80) = $960, or 9.30% in 11 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.
