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 - Meta Platforms, Inc. (META) – STOP LOSS
SELL – Meta Platforms, Inc. (META) February 2023 $155-$160 in-the-money vertical BEAR PUT spread at $3.15
Closing Trade
2-1-2023
expiration date: February 17, 2023
Portfolio weighting: 10%
Number of Contracts = 26 contracts
This was a short-term mildly bearish trade on Meta Platforms, Inc. (META) that META would stay below $155 before February expiration and this trade has been a quiet disaster as META has literally gone up every day.
The news from Washington that its competitor TikTok would be banned meant that traders piled into META shares in the short term.
I wanted to hold on until the earnings report this afternoon but we are cutting it way too loose as we start to inch closer to the lower strike of our trade.
There is a high chance that META will guide poorly but giving up some big chunks the past few days, we need to cut our losses here.
Fed Chair Jerome Powell didn’t rock the market this morning and gave it a very vanilla offering of 25 basis point hike with not much venom behind it.
Risk assets are in the midst of rebounding from the morning as this keeps the narrative of a dovish fed perpetuating.
This has been the only bad trade that I have executed so far this year.
Here are the specific trades you need to exit this position:
Sell to Close 26 February 2023 (META) $160 puts at………….………$12.95
Buy to Close 26 February 2023 (META) $155 puts at………..........….$9.80
Net Proceeds:……………………..….............................….………..…….....$3.15
Loss: $3.75 - $3.15 = $.60
(26 X 100 X $.60) = $1,560 or 16.00%
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.