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 - Cisco Systems, Inc. (CSCO) – SELL – STOP LOSS
SELL Cisco Systems, Inc. (CSCO) November 2020 $40-$43 in-the-money vertical BEAR put spread at $2.20
Closing Trade
11-9-2020
expiration date: November 20, 2020
Portfolio weighting: 10%
Number of Contracts = 37 contracts
Macroeconomics come into play here and markets shoot higher as news of a 90% effective Pfizer vaccine is front-page news today.
Unfortunately, our CSCO put spread has blown up because of it with the stock up 5% this morning.
I will cut losses here as the trade is no longer favorable.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES AND DO NOT BUY THE STOCK.
Here are the specific trades you need to exit this position:
Buy 37 November 2020 (CSCO) $43 puts at………….………$3.62
Sell short 37 November 2020 (CSCO) $40 puts at………….$1.42
Net Proceeds:……………………..…...........….……..…..…….....$2.20
Loss: $2.65 - $2.20 = -$.45
(37 X 100 X -$.45) = -$1,665 or -16.65%
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.
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.
