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 - (CCL) – BUY
BUY the Carnival Cruise Lines (CCL) March 2020 $36-$38.00 in-the-money vertical Bear Put spread at $1.60 or best
Opening Trade
3-4-2020
expiration date: March 20, 2020
Portfolio weighting: 10%
Number of Contracts = 59 contracts
So, I am going to use today’s Joe Biden-induced 900-point rally in the Dow Average to sell short. And now I am also in the enviable position in that any short positions in the stock market are hedge by our put options in the (VXX).
The short-term outlook for the cruise lines seems horrific, with the global pandemic increasing by the day. I just checked cruise prices for this summer, and they are offering fantastic deals down 50% from the list prices that prevailed only a month ago. Almost all Asian cruises have been cancelled, forcing massive refunds that have yet to hit the income statement. This is a whole industry that has gone to zero overnight.
I am therefore buying the Carnival Cruise Lines (CCL) March 2020 $$36-$38.00 in-the-money vertical Bear Put spread at $1.60 or best.
To earn this much money on a spread 10% in-the-money with only 12 days to expiration is unimaginable, but that is the kind of trade that a (VIX) of $30 allows.
To lose money on this trade, (CCL) would have to rise above $36 in 12 days, a gain of 20% from today’s level.
This is a bet that Carnival Cruise Lines (CCL) will not trade above $36 by the March 20 option expiration day in 12 trading days.
Don’t pay more than $1.85 for this position or you’ll be chasing.
If you don’t do options, stand aside.
Here are the specific trades you need to execute this position:
Buy 59 March 2020 (CCL) $38.00 puts at………....….………$6.70
Sell short 59 March 2020 (CCL) $36.00 puts at………….….$5.10
Net Cost:……............………………..…….………..………….….....$1.60
Potential Profit: $2.00 - $1.60 = $0.40
(59 X 100 X $0.40) = $2,360 or 25.00% in 12 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.
