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 - (DIS) – SELL – TAKE PROFITS
SELL the Walt Disney Corp (DIS) April 2019 $100-$104 in-the-money vertical BULL CALL spread at $3.99 or best
Closing Trade – NOT FOR NEW SUBSCRIBERS
4-12-2019
expiration date: April 18, 2019
Portfolio weighting: 10%
Number of Contracts = 30 contracts
This is a classic example of the stock owners making much more money than the options players. Since we added this position 13 trading days ago, (DIS) shares have gone ballistic, rising a stunning $26, or 24.29%.
This morning the company released details of its NEW Disney Plus streaming strategy to go head to head with Netflix, which has been heavily leaked for weeks.
I am therefore selling the Walt Disney Corp (DIS) April 2019 $100-$104 in-the-money vertical BULL CALL spread at $3.99 or best. The risk/reward for continuing five more days until the April 18 option expiration to capture the final penny is no longer favorable. By coming out here, you get to book a $1,770 profit or 17.35% in 13 trading days.
This was in keeping with my recent strategy of only taking on very deep in-the-money, very short-dated positions. This is the only way to work with a long-term topping market which could continue on for months. It also doesn’t hurt that (DIS) shares were sitting right at two-month support on the charts.
This was a bet that Disney shares will not fall below the $104 strike price by the April 18 options expiration date. That would be a total decline of 11.32% from the recent top for one of the best run companies in America.
Here are the specific trades you need to exit this position:
Sell 30 April 2019 (DIS) $100 calls at……….............….………$28.00
Buy to cover short 30 April 2019 (DIS) $104 calls at………….$24.01
Net Proceeds:……………………..…….………..…………..........….....$3.99
Profit: $3.99 - $3.40 = $0.59
(30 X 100 X $0.59) = $1,770 or 17.35% in 13 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.
