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 - Amazon.com, Inc. (AMZN) – STOP LOSS
SELL Amazon.com, Inc. (AMZN) May 2024 $165-$170 in-the-money vertical BULL CALL spread at $3.70
Closing Trade
4-23-2024
expiration date: May 17, 2024
Portfolio weighting: 10%
Number of Contracts = 25 contracts
I’m going to take a small loss here on my AMZN bull call spread.
The underlying stock has exhibited highly poor price action since we entered into this trade.
The dip buyers vacated and the stock fell from the 180s and I believe the past 2 days' dump is a good exit position before earnings.
Tech earnings have shown that traders are ready to take profits into bidding the stock higher.
It’s better to take a small loss than expose ourselves to a swift rotation that could hurt our position even more.
I am pulling out here at $3.70.
Here are the specific trades you need to exit this position:
Sell to Close 25 May 2024 (AMZN) $165 calls at……….….………$16.70
Buy to Close 25 May 2024 (AMZN) $170 calls at…………...........$13.00
Net Proceeds:……………………..……....………..……........................$3.70
Loss: $4-$3.7= $0.30
(25 X 100 X $.30) = $750 or 7.50%
If you are uncertain about 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.
