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) – TAKE PROFITS
SELL the Amazon (AMZN) September 2020 $2,800-$2,900 in-the-money vertical Bull Call spread at $96.00 or best
Closing Trade
9-17-2020
expiration date: September 18, 2020
Portfolio weighting: 10%
Number of Contracts = 1 contract
They are hitting big tech again today, so I am going to cut my highest risk position as it approached the upper $2,900 strike price.
I know that means leaving half the potential profit on the table. But with the position expiring tomorrow, there is not enough time left for things to go right again if they suddenly go wrong this afternoon and tomorrow.
I am therefore selling the Amazon (AMZN) September 2020 $2,800-$2,900 in-the-money vertical Bull Call spread at $96.00 or best. By coming out here, you get to take home a modest $800, or 8.95% in 9 trading days.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
The stock has already discounted its enormous presence in online retail. It has yet to barely hint at valuing its future highest growth areas of web services, healthcare, and food.
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 that piece).
Amazon has already hit that target….without the breakup. And the breakup value has since soared to $5,000 a share.
This was a bet that Amazon (AMZN) would not trade below $2,900 by the September 18 option expiration day in 9 trading days.
Here are the specific trades you need to exit this position:
Sell 1 September 2020 (AMZN) $2,800 calls at……...............……$210.00
Buy to cover short 1 September 2020 (AMZN) $2,900 calls at....$114.00
Net Proceeds:…………………..…….………..………..................….….....$96.00
Profit: $96.00 - $88.00 = $8.00
(1 X 100 X $5.00) = $800, or 8.95% in 9 trading days.
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 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.
