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) – STOP LOSS
SELL the Deere & Co. (DE) August 2024 $330-$340 vertical BULL CALL debit spread at $8.20 or best
Closing Trade
8-8-2024
expiration date: August 16, 2024
Portfolio weighting: 10%
Number of Contracts = 12 contracts
The failure of Deere & Co. to rally substantially for the last three days is somewhat disturbing. That means it could drop below our lower strike at $340 on the next selloff, which could happen at any time.
It's easier to dig yourself out of a small hole than a big one.
Therefore, I am selling the Deere & Co. (DE) August 2024 $330-$340 vertical BULL CALL debit spread at $8.20 or best.
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 10 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 used 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 fall below $340 by the August 16 option expiration in 25 trading days.
Here are the specific trades you need to exit this position:
Sell 12 August 2024 (DE) $330 calls at………….….............……$24.00
Buy to cover short 12 August 2024 (DE) $340 calls at…………$15.80
Net Proceeds:………………………….………..………….............….....$8.20
Loss: $8.70 - $8.20 = -$0.50
(12 X 100 X $0.50) = $600
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.
