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 $175-$180 in-the-money vertical Bear Put spread at $4.40 or best
Opening Trade
1-30-2019
expiration date: February 15, 2019
Portfolio weighting: 10%
Number of Contracts = 22 contracts
The Federal Reserve has had its say at its Open Market Committee Meeting and “PATIENCE” is still the order of the day.
Stocks Pop to a 16X Multiple, on a Dow up 500 point day. Given that earnings growth for 2019 are coming down to a 0%-5% range the market looks a little bit rich to me. Don’t try to pick up too many pennies in front of the steamroller.
Apple managed to deliver just enough earnings to deliver an upside surprise, one penny to be exact. That was enough to unleash a $10 pop in the stock.
Now we go back to more humdrum headlines. After a day of glory, it’s back to the penalty box.
iPhone sales, the company’s main breadwinner, are falling, down 27% in China alone. A drip of negative reports from third part Apple parts suppliers will continue. And the global economy is deteriorating by the day.
The only way I could lose on this trade is if they solve the China trade war in the next 12 days, which isn’t going to happen.
I am therefore buying the Apple (AAPL) February 2019 $175-$180 in-the-money vertical BEAR PUT spread at $4.40 or best. If you can’t get done at $4.40 then walk up your limit ten cents at a time quickly until it is. There is easy money in this trade.
This is a bet that Apple will not rise above the $180 strike price by the February 15 options expiration date in 12 trading days.
Don’t pay more than $4.70 for this position or you’ll be chasing.
If you don’t do options stand aside. This is just a short-term expiration play.
Don’t get me wrong. Long term Apple doubles, just not right now.
Here are the specific trades you need to execute this position:
Buy 22 February 2019 (AAPL) $180 puts at………….………$16.00
Sell short 22 February 2019 (AAPL) $175 puts at………….$11.60
Net Cost:……………………..…….………..………….….....$4.40
Potential Profit: $5.00 - $4.40 = $0.60
(22 X 100 X $0.60) = $1,320 or 13.63% in 12 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.
