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 $280-$290 in-the-money vertical Bull Call spread at $9.80 or best
Closing Trade
6-24-2020
expiration date: July 17, 2020
Portfolio weighting: 10%
Number of Contracts = 12 contracts
In retrospect, this is looking like a stupidly cautious trade as the strike prices are so far in-the-money. Since I picked it up seven trading days ago, the shares have risen a stunning $45, or 13%. Apple is now a gargantuan $1.6 trillion company.
When I begged you to buy Apple LEAPS in March, the stock traded down to $210. My two-year target was $400. Only three months later, and we are almost there.
As a result, we have captured 83% of the maximum potential profit with 17 trading days to run until the July 17 option expiration. The risk/reward is no longer favorable.
I am therefore selling the Apple (AAPL) July 2020 $280-$290 in-the-money vertical Bull Call spread at $9.80 or best. By coming out here, you get to earn $1,200 or 11.36% in 7 trading days. Well done and on to the next trade, probably a biotech one.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and decrease your bid by 10 cents with a second order.
This was a bet that Apple (AAPL) would not trade below $290 by the July 17 option expiration day in 23 trading days.
Here are the specific trades you need to exit this position:
Sell 12 July 2020 (AAPL) $280 calls at………….…......……$89.00
Buy to cover short 12 July 2020 (AAPL) $290 calls a…...$79.20
Net Proceeds:……………………..…….………..………….....….....$9.80
Profit: $9.80 - $8.80 = $1.00
(12 X 100 X $1.00) = $1,200 or 11.36% in 7 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.
