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) October 2022 $20-23 vertical BULL CALL spread at $2.95 or best
Closing Trade
10-4-2022
expiration date: October 21, 2022
Portfolio weighting: 10%
Number of Contracts = 40 contracts
I’m sorry, but when I am offered 90% of my maximum potential profit in only five trading days, I take it. The risk/reward of continuing with this trade for the last ten cents is no longer favorable.
Since we added this position last week, (FCX) has risen by an astonishing 15%.
Please remember that I told you earlier that each Tesla needs 200 pounds of copper, that Tesla sales could double to 2 million this year, and that they could sell 4 million if they could make them.
Therefore, I am selling the Freeport McMoRan (FCX) October 2022 $20-23 vertical BULL CALL spread at $2.95 or best.
As a result, you get to take home $1,800, or 18.00% in 5 trading days. Well done and on to the next trade.
Freeport McMoRan reported Net income that more than doubled to an eye-popping $1.53 billion, or $1.04 a share, from $718 million, or 48 cents a share, in the year-ago period. Excluding nonrecurring items, adjusted earnings per share of $1.07 beat the FactSet consensus of 94 cents.
This was a bet that (FCX) will not fall below $23.00 by the October 21 options expiration in 18 trading days.
I have a feeling that Freeport McMoRan is my new rich uncle, cutting me generous maintenance checks every month.
Here are the specific trades you need to exit this position:
Sell 40 October 2022 (FCX) $20 calls at…………..........………$11.00
Buy to cover short 40 October 2022 (FCX) $23 calls at…......$8.05
Net Proceeds:………………………….………..…………...........….....$2.95
Profit: $2.95 - $2.50 = $0.45
(40 X 100 X $0.45) = $1,800, or 18.00% in 5 trading days.
If you are uncertain about 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.
