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 - (AMZN) - BUY
BUY the Amazon (AMZN) April 2020 $1,600-$1,650 in-the-money vertical BULL CALL spread at $40.00 or best
Opening Trade
4-3-2019
expiration date: April 17, 2020
Portfolio weighting: 10%
Number of Contracts = 2 contracts
In case I am completely wrong on my bearish view, I am adding some long exposure to hedge my substantial short positions.
Amazon is far and away the biggest beneficiary of the Corona pandemic. Its business is exploding and it has just hired 100,000 new workers to accommodate this hypergrowth. Much of this hypergrowth is permanent. Those sales are never returning to legacy retailers.
(AMZN) is one of the few stocks that is unchanged on the year. That’s because it is the safest stock on the market.
I am therefore buying the Amazon (AMZN) April 2020 $1,600-$1,650 in-the-money vertical BULL CALL spread at $40.00 or best. Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done cancel your order and raise your bid by $1 with a second order.
Don’t pay more than $46.00 or you’ll be chasing.
If you don’t do options, buy the stock outright for a trading bounce.
This is a bet that Amazon shares will NOT fall below $1,650 by the April 17 option expiration date in 10 trading days.
Here are the specific trades you need to execute this position:
Buy 2 April 2020 (AMZN) $1,600 calls at……....………$320.00
Sell short 2 April 2020 (AMZN) $1,650 calls at……….$280.00
Net Cost:………………………….…………..…...........….….....$40.00
Potential Profit: $50.00 - $40.00 = $10.00
(2 X 100 X $10.00) = $2,000 or 20.00% in 10 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.
You must be logged into your account to view the video.
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.
