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) March 2020 $190-$200 in-the-money vertical Bear Put spread at $8.80 or best
Opening Trade
3-10-2020
expiration date: March 20, 2020
Portfolio weighting: 10%
Number of Contracts = 11 contracts
There is talk today about introducing a payroll tax cut to rescue the economy from the Corona pandemic.
I am going to use resulting 800-point intraday rally in the Dow Average to sell short again. And now I am also in the enviable position in that any short positions in the stock market are hedged by our long put options in the (VXX).
It is an old trading nostrum that if you throw good news on a stock, like we saw today, and it fails to rally, you sell the hell out of it.
I am therefore buying the Facebook (FB) March 2020 $190-$200 in-the-money vertical Bear Put spread at $8.80 or best
To earn this much money on a spread 8% in-the-money with only 8 days to expiration is unimaginable, but that is the kind of trade that a (VIX) of $48 allows, today’s high.
To lose money on this trade, (FB) would have to rise above $190 in 8 days, a gain of 15% from today’s level by the March 20 option expiration day.
Don't pay more than $9.50 or you'll be chasing.
If you don’t do options, stand aside.
Here are the specific trades you need to execute this position:
Buy 11 March 2020 (FB) $200 puts at…………....………$25.00
Sell short 11 March 2020 (FB) $190 puts at………….….$16.20
Net Cost:……………………..……........………..………….….....$8.80
Potential Profit: $10.00 - $8.80 = $1.20
(11 X 100 X $1.20) = $1,320 or 13.63% in 8 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.
