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) – SHORT
BUY TO COVER SHORT the Walt Disney (DIS) April $114.00 CALLS at $2.30 or best
Closing Trade
4-4-2019
expiration date: April 18, 2019
Portfolio weighting: 10%
Number of Contracts = 11 contracts
We just crossed the strike price for our short position in the Walt Disney $114 calls so I am out of there.
Specifically, I am buying to cover the Walt Disney (DIS) April $114.00 CALLS at $2.30 or best
This was a bet that (DIS) won’t rise above $114.00 by the April 18 option expiration in 15 days. It was also a hedge against our long position in the Walt Disney Corp (DIS) April 2019 $100-$104 in-the-money vertical BULL CALL spread.
Sure, you don’t complain when you buy fire insurance and your house doesn’t burn down. However, in this case, we had so much insurance that it ate up most of our profit in the long. I hate being so right. (DIS) shares rose much faster than I thought, some $6.
Please note that I sold short only half the number of call options that I am long call spreads to keep us delta neutral and minimize the margin hit to your account.
Here are the specific trades you need to exit this position:
Buy to cover short 11 April 2019 (DIS) $114.00 calls at……$2.30
Loss: $2.30 - $1.05 = -$1.25
(11 X 100 X -$1.25) = -$1,375.
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.