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 - (FXE) – SELL-STOP LOSS
SELL the Invesco Currency Shares Euro Trust (FXE) February 2019 $105-$108 in-the-money vertical BULL CALL spread at $2.60 or best
Closing Trade
1-24-2019
expiration date: February 15, 2019
Portfolio weighting: 10%
Number of Contracts = 38 contracts
With European Community central bank president Mario Draghi commenting today that Europe will not raise interest rates this year, the wind has been knocked out of the Euro.
In these conditions, you stop out as soon as any position posing a threat to your P&L. Hope is not a trading strategy. Right now, there are too many other fish to fry.
I am therefore selling my position in the Invesco Currency Shares Euro Trust (FXE) February 2019 $105-$108 in-the-money vertical BULL CALL spread at $2.60 or best.
By coming out at cost your profit on this position is zero. This is why we do options spreads. We got to live to fight another day, even though the Euro moved a full point against us. The difference, of course, is the time decay we were able to reap during the three weeks we carried this position.
This was a bet that as long as US interest rate hikes pause, the US dollar will fall and the continental currency will rise. What’s next on the menu? Buy emerging markets (EEM) and oil (USO) which also benefit from a flaccid greenback.
This was a bet that the Euro (FXE) will not trade below $108 by the February 15 option expiration day in 28 trading days.
Here are the specific trades you need to exit this position:
SELL 38 February 2019 (FXE) $105 calls at………….………$4.00
Buy to cover short 38 February 2019 (FXE) $108 calls at…….$1.40
Net Proceeds:……………………..…….………..………….….....$2.60
Profit: $2.60 - $2.60 = $0.00
(38 X 100 X $0.00) = $0 or 0%.
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.
