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 $165-$175 in-the-money vertical BEAR PUT spread at $9.00 or up until $9.30
Opening Trade
1-7-2019
expiration date: February 15, 2019
Portfolio weighting: 10%
Number of Contracts = 11 contracts
In the wake of the huge earnings prerelease disappointment last week, I believe Apple shares are going to remain in the dig house, at least until the Q4 announcement on January 29.
That means we have a clear three-week window where the stock will probably go nowhere. There will be several retests of last week’s $142 low and the media will remain fixated on ever new negative data point coming out of Asia.
I am therefore buying the Apple (AAPL) February 2019 $165-$175 in-the-money vertical BEAR PUT spread at $9.00 or up until $9.30.
This is a bet that Apple will not rise above the $165 strike price by the February 15 options expiration date in 28 trading days.
It is also a hedge against our other substantial long positions in technology.
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 11 February 2019 (AAPL) $175 puts at………….………$28.00
Sell short 11 February 2019 (AAPL) $165 puts at………….$19.00
Net Cost:……………………..…….………..………….….....$9.00
Potential Profit: $10.00 - $9.00 = $1.00
(11 X 100 X $1.00) = $1,100 or 11.10% in 28 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.
