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 - (CRM) – TAKE PROFITS
SELL the Salesforce (CRM) March 2020 $115-$120 vertical Bull Call spread at $4.40 or best
Closing Trade
3-16-2020
expiration date: March 20, 2020
Portfolio weighting: 10%
Number of Contracts = 23 contracts
With the Dow Average down 2,000 now, I am inclined to be risk averse. I prepared my portfolio for a 3,000-point drop in the Dow Average. Today, we have already used up 2,000 points of that.
Salesforce is dropping faster than I expected and we are only $10 above our upper strike price. Normally, $10 is more than enough cushion to run a position with four days to expiration. However, these are anything but normal times.
We did take in a huge amount of time decay over the weekend, allowing us to duck out of this position close to cost.
I am therefore selling the Salesforce (CRM) March 2020 $115-$120 vertical Bull Call spread at $4.40 or best. Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
This was a bet that Salesforce (CRM) will not trade below $120 by the March 20 option expiration day in 5 trading days.
Here are the specific trades you need to execute this position:
Sell 23 March 2020 (CRM) $115 calls at………….……......…$19.00
Buy to cover short 23 March 2020 (CRM) $120 calls at….$14.60
Net Proceeds:……………………..…….………..………….…..........$4.40
Profit: $4.40 - $4.30 = $0.10
(23 X 100 X $0.10) = $230 or 2.30% in 1 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.
