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) February 2019 $125-$135 in-the-money vertical BULL CALL spread at $8.60 or best
Opening Trade
1-2-2019
expiration date: February 15, 2019
Portfolio weighting: 10%
Number of Contracts = 12 contracts
Apple has been beaten like a red headed step child, so I think it is safe to go back in with a much more conservative position.
This is a bet that Apple (AAPL) will not trade below $135 by the February 15 option expiration day in 29 trading days.
The lower strike is an eye-popping 42.30%, or $99 lower than the October high. Yes, the world’s largest company would have to drop by almost half in value for us to lose money on this trade. That seems highly unlikely.
Don’t pay more than $9.30 for this position or you’ll be chasing.
If you don’t do options buy the stock outright.
Here are the specific trades you need to execute this position:
Buy 12 February 2019 (AAPL) $125 calls at………….………$33.00
Sell short 12 February 2019 (AAPL) $135 calls at………….$24.40
Net Cost:……………………..…….………..………….….....$8.60
Potential Profit: $10.00 - $8.60 = $1.40
(11 X 100 X $1.40) = $1,540 or 16.27% in 29 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.
