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) July 2020 $2,500-$2,550 in-the-money vertical Bull Call spread at $44.00 or best
Opening Trade
6-23-2020
expiration date: July 17, 2020
Portfolio weighting: 10%
Number of Contracts = 2 contracts
I can play the melt-up game.
I already have a position in Apple (AAPL), which has gone vertically straight up since I bought it last week.
Amazon is in a similar mode, so why not?
When Amazon shares were at $1,000 I wrote a report calculating that its breakup value was at least $3,000 a share (click here for the report). It looks like Amazon may hit that target before yearend….without the breakup. And the breakup value has since soared to $5,000 a share
I am therefore buying the Amazon (AMZN) July 2020 $2,500-$2,550 in-the-money vertical Bull Call spread at $44.00 or best.
Don’t pay more than $47.00 or you will be chasing.
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 increase your bid by 50 cents with a second order.
This is a bet that Amazon (AMZN) will not trade below $2,550 by the July 17 option expiration day in 18 trading days.
Here are the specific trades you need to execute this position:
Buy 2 July 2020 (AMZN) $2,500 calls at………….…..……$290.00
Sell short 2 July 2020 (AMZN) $2,550 calls at…………...$246.00
Net Cost:……………………..…….………..……….........….….....$44 .00
Potential Profit: $50.00 - $44.00 = $6.00
(2 X 100 X $6.00) = $1,200 or 13.63% in 18 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 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.