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) – SELL-TAKE PROFITS
BUY the Apple (AAPL) February 2020 $345-$355 in-the-money vertical Bear Put spread at $9.25 or best
Closing Trade
1-23-2020
expiration date: February 21, 2020
Portfolio weighting: 10%
Number of Contracts = 11 contracts
I am going to use the small dip this morning prompted by the Coronavirus to take profits on my Apple short. We aren’t getting the downside momentum I had hoped and quarterly earnings are out on Tuesday.
I realize that many of you will only break even on this position, but it is better to come out flat than dig yourself out of a big hole.
I am therefore selling the Apple (AAPL) February 2020 $345-$355 in-the-money vertical Bear Put spread at $9.25 or best.
I believe that Apple shares will reach $400 sometime in 2020. I do NOT believe that Apple will hit my target over the next five weeks.
The shares are definitely overcooked here, up 100% in a year, and gaining an incredible 68% since August. That has created $600 billion in new market capitalization in 12 months. It has been the fastest creation of individual wealth in history, much of it concentrated in the San Francisco Bay Area
Not only that, with the Mad Hedge Market Timing Index living around the nosebleed 70 level for a month, stocks in general are wildly overbought. The market has spectacularly run ahead of falling earnings. The Dow Average is up 40% in 12 months. It’s eye-popping.
This was a bet that Apple (AAPL) would not trade above $345 by the February 21 option expiration day in 19 trading days.
Here are the specific trades you need to exit this position:
Sell 11 February 2020 (AAPL) $355 puts at……......…….………$44.20
Buy to cover short 11 February 2020 (AAPL) $345 puts at….$34.95
Net Proceeds:……………………..…….………..…..........……….….....$9.25
Profit: $9.25 - $9.00 = $0.25
(11 X 100 X $0.25) = $275 or 2.78% in 2 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.
