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) March 2021 $28-$31 vertical bull call spread at $2.75 or best
Closing Trade
3-5-2021
expiration date: March 19, 2021
Portfolio weighting: 10%
Number of Contracts = 40 contracts
Given the extreme volatility in the market, I am inclined to cut my exposure to the industrial metals by half. I’ll be keeping the (XME)
I am therefore selling the Freeport McMoRan (FCX) March $28-$31 vertical bull call spread at $2.75 or best. By coming out here, you get to take home $1,000, or 10.00% in a mere 5 trading days. Half a profit is better than a poke in the eye with a sharp stick.
You can’t have a synchronized global economic recovery without a bull market in commodities. Freeport McMoRan is the world’s largest producer of copper and a long time Mad Hedge customer.
The stock has been on a tear since March on the back of record Chinese buying of copper ahead of their economic recovery, which started seven months ago. I believe this move will continue for years. The old high for the stock in the last cycle was $50.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
This was a bet that Freeport McMoRan will not trade below $31 by the March 19 option expiration day in 12 trading days.
Here are the specific trades you need to exit this position:
Sell 40 March 2021 (FCX) $28 calls at……….….......………$7.00
Buy to cover short 40 March 2021 (FCX) $31 calls at…....$4.25
Net Proceeds:………..…….………..…………...................….....$2.75
Profit: $2.75 - $2.50 = $0.25
(40 X 100 X $0.25) = $1,000 or 10.00% in 5 trading days.
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.
