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
SELL SHORT the Walt Disney (DIS) April $114.00 CALLS at $1.05 or best
Opening Trade
3-22-2019
expiration date: April 18, 2019
Portfolio weighting: 10%
Number of Contracts = 11 contracts
I am going to lower the breakeven point on our existing Walt Disney Corp (DIS) April 2019 $100-$104 in-the-money vertical BULL CALL spread.
I'm going to do this by selling short the Walt Disney (FCX) April $114.00 CALLS at $1.05 or best.
Don’t sell these calls for less than $0.75 or it’s not worth the additional risk.
Here is an opportunity to increase the three-week profit on (DIS) by selling short calls against our existing long call spread position. By selling short the $114 calls for $1.05, we lower the breakeven point on the $100-$104 call spread from $104 to $102.95. This also increases the profit on our total (DIS) position from $1,320 to $2,475, as long as the stock remains between $104 and $114 for 15 more trading days.
This is a bet that (DIS) won’t rise above $114.00 by the April 18 option expiration in 15 days.
Please note that I'm selling 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 execute this position:
Sell short 11 April 2019 (DIS) $114.00 calls at…………$1.05
Potential Profit: $1.05 expires at zero
(11 X 100 X $1.05) = $1,155 or 20% in 15 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.