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) December 2018 $160-$170 in-the-money vertical BULL CALL spread at $8.90 or best
Opening Trade
11-15-2018
expiration date: December 21, 2018
Portfolio weighting: 10%
Number of Contracts = 11 contracts
Apple has been beaten like a red headed step child, so I think it is safe to go back in with a much more conservative position.
This is a much more cautious trade than the last one. The strike prices are a further 15.78% in the money. There are now only 30 days to the December 21 option expiration. And we have a $10 spread between strikes.
This is a bet that Apple (AAPL) will not trade below $170 by the December 21 option expiration day in 30 trading days.
The lower strike is an eye-popping 31.91% lower than the October high. Yes, the world’s largest company would have to drop by a third in value for us the lose money on this trade. That seems highly unlikely.
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 December 2018 (AAPL) $160 calls at………….………$21.00
Sell short 11 December 2018 (AAPL) $170 calls at………….$17.00
Net Cost:……………………..…….………..………….….....$8.90
Potential Profit: $10.00 - $8.90 = $1.10
(11 X 100 X $1.10) = $1,210 or 12.35% in 30 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.
