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 - (GOOGL) – TAKE PROFITS
Sell the Alphabet (GOOGL) December 2019 $1,200-$1,230 in-the-money vertical BULL CALL spread at $29.50 or best
Closing Trade
12-12-2019
expiration date: December 20, 2019
Portfolio weighting: 10%
Number of Contracts = 4 contracts
Last summer, when I predicted that markets would rally hard into yearend, people laughed. Many more just sat pat with their index funds.
Today, we have a monster rally of the back of news that Trump is cancelling the December 15 tariff hike, as I expected. With only six real trading days left in 2019, it’s safe to call this a will. After Friday next week, everyone will be mailing it in.
We have squeezed all the juice out of this lemon that we are going to get. From here on, the risk/reward turns against you, especially going into a weekend where the president may, or may not, implement a new round of tariffs against China.
I am therefore selling the Alphabet (GOOGL) December 2019 $1,200-$1,230 in-the-money vertical BULL CALL spread at $29.50 or best. By coming out here, you get to earn $1,800, or 18% in 14 trading days. At this point, we have 90% of the maximum potential profit.
Raising cash also allows you to go back into (GOOGL) on the next market selloff.
This was a bet that Alphabet (GOOGL) will not trade below $1,230 by the December 20 option expiration day in 22 trading days.
Well done, and on to the next trade.
Here are the specific trades you need to exit this position:
Sell 4 December 2019 (GOOGL) $1,200 calls at……..........…...….…$150.00
Buy to cover short 4 December 2019 (GOOGL) $1,230 calls at......$120.50
Net Proceeds:………………………….…............……..………….….............$29.50
Profit: $29.50 - $25.00 = $4.50
(4 X 100 X $4.50) = $1,800 or 18% in 14 trading days.
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.
