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.
BUY the Amazon (AMZN) December, 2018 $1,450-$1,500 in-the-money vertical BULL CALL spread at $38.00 or best
Opening Trade
11-12-2018
expiration date: December 21, 2018
Portfolio weighting: 10%
Number of Contracts = 3 contracts
I believe that Amazon (AMZN) shares are oversold in the extreme, and that there is some nice cherry picking to be had. Not only that, I think the current bout of volatility will end later this week as we start the Thanksgiving slowdown and then the yearend rally.
I am therefore buying the Amazon (AMZN) December, 2018 $1,450-$1,500 in-the-money vertical BULL CALL spread at $38.00 or best.
Don’t pay more than $44.00 or you’ll be chasing.
This is a bet that Amazon shares will NOT fall below $1,500 by the December 21 option expiration date in 33 trading days. That would be a decline of a heart-stopping 31% from the October high weeks ago, or a loss of $340 billion in market capitalization.
Yes, the world’s second largest company would have to lose a third of its value in a month for you to lose money on this trade, off the back of a great earnings report.
Here are the specific trades you need to execute this position:
Buy 3 December 2018 (AMZN) $1,450 calls at…….………$220.00
Sell short 3 December 2018 (AMZN) $1,500 calls at……….$182.00
Net Cost:………………………….…………..…….….....$38.00
Potential Profit: $50.00 - $38.00 = $12.00
(3 X 100 X $12.00) = $3,600 or 31.57% in 33 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.
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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.
