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 - (FB) – BUY
Buy the Facebook (FB) April 2020 $145-$155 in-the-money vertical Bull Call spread at $9.20 or best
Opening Trade
4-13-2020
expiration date: April 17, 2020
Portfolio weighting: 10%
Number of Contracts = 11 contracts
I am going to keep with my buy low, sell high philosophy.
So, I am going to use the today’s 650-point rally in the Dow Average to increase my short positions. Say thanks to the still elevated level of the Volatility Index (VIX).
As much as I love Facebook for the long term, I don’t believe that we are going to crash again over the next four days. Believe it or not, I think this week could be boring, at least compared to the recent action.
This position also has the benefit of partially hedging our existing short position in Facebook with the May $190-$200 vertical bear put spread. I think the days of cataclysmic $1,500-$2,000-point days in the Dow are behind us, so It is safe to start putting on these very short term plays.
I am therefore buying the Facebook (FB) April 2020 $145-$155 in-the-money vertical Bull Call spread at $9.20 or best.
Don’t pay by more than $9.50 or you’ll be chasing. Worst case, you can put in a low bid and get done if we get another end of the day puke-out.
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 increase your bid by 20 cents with a second order.
This is a bet that Facebook (FB) will not trade below $155 by the April 17 option expiration day in 4 trading days.
Here are the specific trades you need to execute this position:
Buy 11 April 2020 (FB) $145 calls at………….……..…$27.00
Sell short 11 April 2020 (FB) $155 calls at…………...$17.80
Net Cost:……………………..…….………..…………....….....$9.20
Potential Profit: $10.00 - $9.20 = $0.80
(11 X 100 X $0.80) = $880 or 8.69% in 4 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.
You must be logged into your account to view the video.
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.
