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) August 2019 $167.50-$172.50 in-the-money vertical BULL CALL spread at $4.50 or best
Opening Trade
8-7-2019
expiration date: August 16, 2019
Portfolio weighting: 10%
Number of Contracts = 22 contracts
I am going to use the big selloff this morning to dive back into Facebook shares. I believe the 200-day moving average will provide major support over the next week or so.
I am therefore buying the Facebook (FB) August 2019 $167.50-$172.50 in-the-money vertical BULL CALL spread at $4.50 or best
Don’t pay more than $4.70 or the risk/reward will go against you.
This is a bet that the Facebook (FB) will not trade below $172.50 by the August 16 option expiration day in 7 trading days.
If you don’t do options, stand aside. We are close to the bottom of a new range and it is too late to go long or short.
Here are the specific trades you need to execute this position:
Buy 22 August 2019 (FB) $167.50 calls at………….………$18.00
Sell short 22 August 2019 (FB) $172.50 calls at………….$13.50
Net Cost:………………………….…...........……..………….….....$4.50
Potential Profit: $5.00 - $4.50 = $0.50
(22 X 100 X $0.50) = $1,100 or 11.11% in 7 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.
