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) – TAKE PROFITS
SELL the Walt Disney Corp. (DIS) June 2020 $85-$90 in-the-money vertical Bull Call spread at $4.75 or best
Closing Trade
5-15-2019
expiration date: June 19, 2020
Portfolio weighting: 10%
Number of Contracts = 24 contracts
I am going to take the hard-earned lesson I learned this morning on the (TLT) short position and take profits in my long in Walt Disney (DIS) on the back of its 24 hour, $9 rally.
As cloudy as the near-term outlook is for Walt Disney, I love it for the long term, so do a ton of other portfolio managers who are willing to take some short term heat in order to get into one of the best-managed companies in America with some of the greatest digital assets.
I am therefore selling the Walt Disney Corp. (DIS) June 2020 $85-$90 in-the-money vertical Bull Call spread at $4.75 or best.
The risk/reward of continuing for another month for just 25 cents is no longer favorable. By coming out here, you get to earn $1,320, or 13.09% in only 2 trading days.
Only use a limit order. 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 five cents with a second order.
This was a bet that Walt Disney shares will NOT fall below $90 by the June 19 option expiration date in 26 trading days.
Here are the specific trades you need to exit this position:
Sell 24 June 2020 (DIS) $85 calls at…….....………………$24.00
Buy to cover short 24 June 2020 (DIS) $90 calls at…….$19.25
Net Proceeds:.…………….............…….…………..…..….….....$4.75
Profit: $4.75 - $4.20 = $0.55
(24 X 100 X $0.55) = $1,320 or 13.09% in 2 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 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.
