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 - (BAC) –STOP LOSS
SELL the Bank of America (BAC) November 2021 $43-$46 in-the-money vertical Bull Call spread at $2.00
Trade Date: 11-19-2021
Expiration Date: November 19, 2021
Portfolio weighting: 10%
Number of Contracts = 40 contracts
In the last 24 hours, we have learned about a new covid wave in Europe. This has triggered a major global stock market selloff, soaring bond prices, and collapsing interest rates. Financial stocks are the worse hit.
Of course, this had to happen on our largest option expiration day of the year when we have five positions expiring in hours either at or just out of the money. If you trade markets long enough, this happens once every several years. We have had a tremendous run this year and it was just a matter of time before this happened.
As a result, I am selling the Bank of America (BAC) November 2021 $43-$46 in-the-money vertical Bull Call spread at $2.00 or best.
This was a bet that Bank of America (BAC) would not fall below $46.00 by the November 19 option expiration day in 12 trading days.
Here are the specific trades you need to exit this position:
Sell 40 November 2021 (BAC) $43 calls at……….............….………$2.00
Buy to cover short 40 November 2021 (BAC) $46 calls at………...$0.00
Net Proceeds:……….……..…….………..………………….......….….….....$2.00
Loss: $2.70 - $2.00 = $0.70
(40 X 100 X $0.70) = $2,800.
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.
