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 - (AAPL) ? TAKE PROFITS
SELL the Apple (AAPL)?June, 2018 $130-$140 in-the-money vertical BULL CALL spread at $9.80 or best
Closing Trade
4-13-2018
expiration date:?June 15, 2018
Portfolio weighting: 10%
Number of Contracts = 12 contracts
We are so far in the money now on this position, some?$34.92, or 24.94%, it is ridiculous.
We have sucked all the marrow out of this trade, so it is time to bail out and free up cash for the next trade, so we can re-establish our long in Apple on the next Tweet storm, missile attack, or trader war escalation.
There is no point putting at risk $9.90 for the last ten cents.
I still love Apple and think it is going to new highs shortly. I just think we can get back in at a lower price.
You have just earned a 22.22% profit on this trade?in two months, or some $2,160 on a $10,000 weighting. We?ll done and go out and buy yourself and your partner a beer.
At this price we have captured 94.73% of the maximum potential profit. The risk/reward of continuing is no longer favorable.
Long dated options can be tricky to execute, as most trading volume is concentrated in the near months. This is the kind of trade that hedge funds do all day long.
So put the $9.90 limit in, wait a few minutes, and if it does get done cancel it and reenter a new order ten cents lower. You have to discover where the real market is on your own.
You may recall that we establish this position back on?February 9?when the world was ending, hedge funds were blowing up, and traders were jumping out of windows.
This is when the risk/reward of entering new trades is the best of the year, and sometime the decade.
As my mentor Warren Buffet says, ?Buy when other are fearful, and sell when others are greedy.? This is a perfect example of how that works.
Here are the specific trades you need to execute this position:
Sell?12 June 2018?(AAPL) $130 calls at??.???$47.00
Buy to cover short?12 June 2018?(AAPL) $140 calls at??.$37.20
Net Proceeds:??????????.????..??.?
Profit: $9.80 - $8.10 = $1.70
(12 X 100 X $1.70) = $2,040 or 20.98%?in two months.
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.
Be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today's market, investors need every advantage they can get.
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.