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 - (DHI) – TAKE PROFITS
SELL the DH Horton (DHI) August 2024 $150-$155 vertical BULL CALL debit spread at $4.98 or best
Closing Trade
8-13-2024
expiration date: August 16, 2024
Portfolio weighting: 10%
Number of Contracts = 25 contracts
Time to take the money and run.
We have an important number coming up at 8:30 AM EST on Wednesday, August 14. That is the July CPI report. A hot CPI could cause (GLD) to tank $10.
Since options markets are discounting 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 96.67% of the maximum potential profit in hand. The risk/reward of continuing three more days until the August 16 option expiration is no longer favorable.
The Fed is planning an interest rate cut of 25 basis points and all falling interest rate plays in the stock market are in play.
Therefore, I am selling the DH Horton (DHI) August 2024 $150-$155 vertical BULL CALL debit spread at $4.98 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 2 cents with a second order.
The bull case for homebuilders is very simple. They are Catching on Fire, with the prospect of falling interest rates. The US has a structural shortage of 10 million homes with 5 million Millennial buyers. Homebuilders have been underbuilding since the 2008 Great Financial Crisis, seeking to emphasize profits and share buybacks over to development land purchases.
Buy (DHI), (LEN), (PMH), (KBH) on any dips. (DHI) is the largest of these with a market capitalization of $57.3 billion.
For details about DH Horton please visit their site at https://www.drhorton.com
This was a bet that (DHI) will not fall below $155.00 by the August 16 option expiration in 16 trading days.
Here are the specific trades you need to close out this position:
Sell 25 August 2024 (DHI) $150 calls at………….……....…$26.00
Buy to Cover short 25 August 2024 (DHI) $155 calls at…$21.02
Net Proceeds:………………………..………….….......................$4.98
Profit: $4.98 - $4.40 = $0.58
(25 X 100 X $0.58) = $1,450 or 13.18% in 13 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.
