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 - (FCX) ??? TAKE PROFITS
SELL the Freeport McMoRan (FCX)??February, 2018 $17-$18 in-the-money vertical BULL CALL spread at $0.80 or best
Closing Trade
2-5-2018
expiration date:??February 16, 2018
Portfolio weighting: 10%
Number of Contracts = 128 contracts
I am going to de-risk my portfolio here.
Sentiment has clearly changed, and it???s is better to retreat to the sidelines. Once these in-the-money options spreads tick out of the money, the risk/reward of continuing is no longer favorable.
There is no doubt that the presidential release of a classified memo is a factor. No one wants to step up in the face of a brewing constitutional crisis.
Thank goodness for small hedges and short expiration dates, as these greatly limited our losses. As long as volatility stays high it will be easy to make more money with another position.
This was a bet that Freeport shares will??NOT??fall below $18 by theFebruary 16??option expiration in 19 trading days, compared to the then current??$18.40.??We missed by nine days.
If you bought Freeport (FCX) shares outright I think this is just a temporary dip. The bull market and the commodities story is still on.
Here are the specific trades you need to exit this position:
Sell 128 February 2018 (FCX) $17 calls at??????.?????????$1.75
Buy to cover short 128 February 2018 (FCX) $18 calls at???.$0.95
Net Proceeds:??????????????????????????????.????????????..??????.???
Profit: $0.80 - $0.78 = $0.02
(128 X 100 X -$0.02) = $256, or 2.52% profit.
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.