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 - Autodesk, Inc. (ADSK) – SELL – STOP LOSS
SELL Autodesk, Inc. (ADSK) April 2020 $155-$165 in-the-money vertical BULL call spread at $7.10
Closing Trade
3-6-2020
expiration date: April 17, 2020
Portfolio weighting: 10%
Number of Contracts = 11 contracts
I can easily say that I have never seen such awful price action in a stock that hasn’t done much wrong.
Shares were at $192 intraday yesterday and now sits close to our upper strike price of $165, almost a 15% drop.
The stock is down 8% today and the Nasdaq is down a stomach-churning 4%.
The illogical panic selling continues for a company that is used by professional design engineers in construction, aviation, and automobile sectors makes no sense.
When tech is selling off indiscriminately, we must take notice.
Luckily, we had a spread that absorbed much of the losses, the downside of spreads is that the maximum gain is limited to the upside.
Here are the specific trades you need to execute this position:
Sell 11 April 2020 (ADSK) $155 call at………….….............……$19.80
Buy to cover short 11 April 2020 (ADSK) $165 call at………….$12.70
Net Proceeds:…………....................…………..…….………..…….....$7.10
Loss: $8.60 - $7.10 = -$1.50
(11 X 100 X -$1.50) = -$1,650 or -16.50%
To see how to enter this trade in your online platform, please look at the order ticket below, 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 a Vertical Bull Call Spread” 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.
