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 - ARK Innovation ETF (ARKK) – SELL – TAKE PROFITS
SELL TAKE PROFITS the ARK Innovation ETF (ARKK) June 2022 $47.22-$52.22 in-the-money vertical BEAR PUT spread at $4.40
Closing Trade
6-3-2022
expiration date: June 17, 2022
Portfolio weighting: 10%
Number of Contracts = 25 contracts
This was a tactical trade on Cathie Wood’s ETF ARK Innovation ETF (ARKK) that ARKK would not rise above $47.22 in the next 25 days.
ARKK has had a nice “innovation” bump lately and this is a bet that it won’t last too long.
The stock has been highly volatile with the underlying stock ARKK up big yesterday and today it’s down big.
Since it’s down over 6% this morning, I do believe this is a great time to cash in the profits, because these explosions to the upside have been harsh.
We will take a modest profit in this one as the risk inching towards expiration supersedes the cost of maintaining this trade.
Here are the specific trades you need to exit this position:
Sell to Close 25 June 2022 (ARKK) $52.22 puts at….………$9.60
Buy to Close 25 June 2022 (ARKK) $47.22 puts at………….$5.20
Net Proceeds:………………….............…..…….….……..…….....$4.40
Profit: $4.40-$3.95= $.45
(25 X 100 X $.45) = $1,125 or 11.40%
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.
