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) March 2020 $220-$230 in-the-money vertical Bull Call spread at $9.30 or best
Closing Trade
3-17-2020
expiration date: March 20, 2020
Portfolio weighting: 10%
Number of Contracts = 11 contracts
I am going to use today’s 725-point rally off the bottom in the Dow Average and the $13 pop in Apple to take profits and reduce risk. Even though these options expire in three days and we are $25 in-the-money, I don’t have enough cushion to handle another 3,000-point dive in the Dow. Risk control is the order of the day.
At this point, anything can happen with just three days to the March 20 option expiration, including another down 3,000-point day.
We have benefited enormously from five days of time decay in holding this position, which has made up our entire profit. Buy coming out here, I can capture 41.67% of the maximum potential profit.
I am therefore selling the Apple (AAPL) March 2020 $220-$230 in-the-money vertical Bull Call spread at $9.30 or best.
This was a bet that Apple (AAPL) would not trade below $230 by the March 20 option expiration day in 8 trading days.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Here are the specific trades you need to exit this position:
Sell 11 March 2020 (AAPL) $220 calls at……….....….………$30.00
Buy to cover short 11 March 2020 (AAPL) $230 calls at….$20.70
Net Proceeds:……………......………..…….………..………….….....$9.30
Profit: $9.30 - $8.80 = $0.50
(11 X 100 X $0.50) = $550 or 5.68% in 5 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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Things to Keep in Mind
Remember, these are ballpark prices only. There is no telling how much the market can move by the time you get this.
Be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today's market, investors need every advantage they can get.
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.
