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) – TAKE PROFITS
SELL the Apple (AAPL) July 2020 $320-$330 in-the-money vertical Bull Call spread at $9.95 or best
Closing Trade
7-9-2020
expiration date: July 17, 2020
Portfolio weighting: 10%
Number of Contracts = 12 contracts
When the markets bottomed on March 23, I rushed followers into Apple LEAPS with the stock at $211. My two-year forecast for the stock was $400. Three and a half months later here we are with the stock at $403. It’s the kind of move you only see once or twice in a lifetime.
Since I added this position only two weeks ago, the shares have risen by $57. As a result, we have captured 96.9% of the maximum potential profit. The risk/reward for continuing five more days until the July 17 option expiration is no longer favorable.
I love Apple for the long term. We are on the eve of 5G phones, which will become the greatest moneymaker of all time. This trade was essentially a bet that we wouldn’t see a major crash again like we saw in February-March. Apple is now the preeminent “safe” stock in the market.
I am therefore selling the Apple (AAPL) July 2020 $320-$330 in-the-money vertical Bull Call spread at $9.95 or best. If you can’t get this price, just run the position into expiration and collect the full $10.00.
Buy coming out here you get to earn $1,860, or 18.45% in 9 trading days. Well done and on to the next trade.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
This was a bet that Apple (AAPL) would not trade below $330 by the July 17 option expiration day in 14 trading days.
Here are the specific trades you need to exit this position:
Sell 12 July 2020 (AAPL) $320 calls at…….......…….………$63.00
Buy to cover short 12 July 2020 (AAPL) $330 puts at…...$53.05
Net Proceeds:……….……..…….…............……..………….….....$9.95
Profit: $9.95 - $8.40 = $1.55
(12 X 100 X $1.55) = $1,860 or 18.45% in 9 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.
