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 - (DE) – TAKE PROFITS
SELL the Deere & Co. (DE) August 2024 $375-$385 vertical Bear Put debit spread at $9.95 or best
Closing Trade
8-12-2024
expiration date: August 16, 2024
Portfolio weighting: 10%
Number of Contracts = 12 contracts
We have an important number coming up at 8:30 AM EST on Wednesday August 14. That is the July CPI report. Since options markets are discount a large move up or down to follow it behooves us to take what easy profits we can.
This position is the low-hanging fruit as we have 96.15 of the maximum potential profit in hand. The risk/reward of continuing is no longer favorable.
Therefore, I am selling the Deere & Co. (DE) August 2024 $375-$385 vertical Bear Put debit spread at $9.95 or best.
As a result, you get to take home $1,500 or 14.37% in 7 trading days. Well done and on to the next trade.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done cancel your order and lower your offer by 5 cents with a second order.
The bull case for Deere & Co. is simple. Falling interest rates will bring huge cost reductions for heavy borrowers like (DE). The company provides tractors and other heavy equipment use for agriculture, mining, and construction, all of which will see imminent turnarounds thanks to lower interest rates.
Deere $ Co shares are trading at a positively subterranean price earnings multiple of 11X, compared to 21X doe the S&P 500 and 40X for (NVDA). It also pays a modest 1.63% dividend yield.
For details about Deere & Co, (DE), please click here to visit their website.
This was a bet that the (DE) would not rise above $375 by the August 16 option expiration in 4 trading days.
Here are the specific trades you need to close out this position:
Sell 12 August 2024 (DE) $385 puts at………….………........$42.00
Buy to cover short 12 August 2024 (DE) $375 puts a………$32.05
Net Cost:………………………….………..………….…....................$9.95
Profit: $9.95 - $8.70 = $1.25
(12 X 100 X $1.25) = $1,500 or 14.37% in 7 trading days.
If you are uncertain about 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.
