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) – SELL – STOP LOSS
SELL STOP LOSS Amazon.com, Inc. (AMZN) January 2023 $98-$103 in-the-money vertical BEAR PUT spread at $3.93
Closing Trade
1-13-2023
expiration date: January 20, 2023
Portfolio weighting: 10%
Number of Contracts = 22 contracts
I executed a 9-day trade that underlying shares of AMZN would stay below $98 and the price action has gone the other way.
Even with an underwhelming deflation report, AMZN has been thrown into this bear market rally and the momentum is strong.
AMZN was down over 1% in this morning’s pre-market trading only to zoom higher and closing in on 2%.
This means I will take a loss here and get out of the way.
The buy the dip mentality is back in tech as the US central bank is out of bullets and doesn’t plan to raise interest rates anymore.
Don’t get in the way on the short side of a bear market rally.
Here are the specific trades you need to exit this position:
Sell to Close 22 January 2023 (AMZN) $103 puts at………….………$6.74
Buy to Close 22 January 2023 (AMZN) $98 puts at……..........…….$2.81
Net Proceeds:……………………..…….………...........................…….....$3.93
Loss: $4.45-$3.93 = $.52
(22 X 100 X $.52) = $1,144 or 11.68%
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.
