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.
Tech Alert - Apple Inc. (AAPL) – TAKE PROFITS
SELL Apple Inc. (AAPL) November 2021 $137-$142 in-the-money vertical BULL call spread at $4.98
Closing Trade
11-18-2021
expiration date: November 19, 2021
Portfolio weighting: 10%
Number of Contracts = 23 contracts
This was a short-term bet that Apple Inc. (AAPL) would stay above $142 by November 19th expiration and the underlying stock is trading at $157 now meaning that barring anything crazy, we will expire in-the-money.
Why did we make this trade?
Apple was down more than 3% that morning because of constraints that had around a $6 billion revenue dollar impact, driven primarily by industry-wide silicon shortages and COVID-related manufacturing disruptions.
It did nothing to dent the overall story of Apple and had set an all-time record for Mac and quarterly records for iPhone, iPad, wearables, home, and accessories, representing 30 percent year-over-year growth in products.
Apple’s services business performed better than expected in the latest quarter where they had a record of $18.3 billion and grew 26 percent year over year. And they set quarterly records in every geographic segment with strong double-digit growth across the board.
That sounds like a company to dip-buy into which is what we did.
Apple still has a chance at hitting my year-end target of $170, so we are just $13 from that with 6 weeks left this year.
Here are the specific trades you need to exit this position:
Sell to Close 23 November 2021 (AAPL) $137 calls at………….………$20.37
Buy to Close 23 November 2021 (AAPL) $142 calls at………........….$15.39
Net Proceeds:……………………..…….………..…............................….....$4.98
Profit: $4.98 - $4.28 = $.70
(23 X 100 X $.70) = $1,610 or 16.35%
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.
