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) – SELL-STOP LOSS
Sell the Amazon (AMZN) June 2019 $1,650-$1,700 in-the-money vertical BULL CALL spread at $34.50 or best
Closing Trade
6-3-2019
expiration date: June 21, 2019
Portfolio weighting: 10%
Number of Contracts = 2 contracts
News that the government is proceeding with an anti-trust suit against Amazon is demolishing the stock this morning, pushing it well below the 200-day moving average. Trump seems intent on destroying all of big tech, so this is a sector to pare back now. All bets are off.
I am therefore selling the Amazon (AMZN) June 2019 $1,650-$1,700 in-the-money vertical BULL CALL spread at $34.50 or best.
If you own the stock, sell it for the short term but keep it for the long term. The anti-trust suit will continue only as long as Trump stays in office.
This was a bet that Amazon shares will NOT fall below $1,700 by the June 21 option expiration date in 27 trading days.
This is also a bet that we are not already in a recession, which I believe is still at least 6-12 months off.
Here are the specific trades you need to execute this position:
Sell 2 June 2019 (AMZN) $1,650 calls at…….….....…….……$139.00
Buy to cover short 2 June 2019 (AMZN) $1,700 calls at….$104.50
Net Cost:………………………….…………..……………..................$34.50
Loss: $45.00 - $34.50 = -$10.50
(2 X 100 X -$10.50) = -$2,100
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.