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 - (GLD)- SELL-STOP LOSS
Sell the SPDR Gold Shares ETF (GLD) March 2019 $119-$122 in-the-money vertical BULL CALL spread at $2.30 or best
Closing Trade
3-4-2019
expiration date: March 15, 2019
Portfolio weighting: 10%
Number of Contracts = 38 contracts
As much as I like gold for the long term, the laws of risk control require me to stop out of my short term position here now that the market has broken the upper $122 strike price.
The Q4 GDP print that came out on Thursday, which came in better than expected at 2.2% instead of the expected under 1.80% is the culprit here. As a result, the entire weak dollar, rising inflation play has been unwinding rapidly since Friday.
I am therefore selling the SPDR Gold Shares ETF (GLD) March 2019 $119-$122 in-the-money vertical BULL CALL spread at $2.30 or best. Once these spreads go out-of-the-money, the risk/reward tips are largely against you. If you don’t have discipline as a trader, then you’ve got nothing.
If you hold the ETF outright keep it. Gold will rally again.
Fortunately, we did have a secondary hedge against our gold position with a short in the bond market. With the (TLT) trading this morning at $119, our position in the iShares Barclays 20+ Year Treasury Bond Fund (TLT) March 2019 $124-$126 in-the-money vertical BEAR PUT spread will almost certainly expire at our maximum profit point next week, generating a $1,114 in extra cash.
This was a bet that (GLD) ETF won’t fall below $122.00 by the March 15 expiration date in 22 trading days.
Here are the specific trades you need to exit this position:
Sell 38 March 2019 (GLD) $119 calls at………….………$3.00
Buy to cover short 38 March 2019 (GLD) $122 calls at..….$0.70
Net Cost:…………………………………………..…….….....$2.30
Loss: $2.60 - $2.30 = -$0.30
(38 X 100 X -$0.30) = -$1,140.
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.
