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.
Tech Alert - Alphabet Inc. (GOOGL) - BUY
BUY the Alphabet Inc. (GOOGL) June 2020 $1,515-$1,520 in-the-money vertical BEAR put spread at $4.20
Opening Trade
5-12-2020
expiration date: June 19, 2020
Portfolio weighting: 10%
Number of Contracts = 23 contracts
This is a short-term put spread that GOOGL will go sideways to down by June expiration.
I promised that we would be hedging our long GOOGL position and no better to hedge it with another GOOGL position. We now have a put spread and call spread with a great possibility of taking profits in both before the June expiration.
Google has had a bad day and could have its first down day in a week. We most likely will not experience 5% gains per week anymore.
Our other call spread Akamai is off 3% but we only have a few days to go until expiration and a high chance to take maximum profits.
We are up in the nosebleed section right now and it is dangerous to trot out a portfolio of all long positions. The FANGs could slow down their rapid run-up and even if they go dead, then that is great for our positions.
Again, at the first sign of unwind, we will be on top of it.
Long term this is a great company, but this is just a short-term position.
We have recently taken in a raft of new subscribers and welcome to the beginning of your trading journey in the strongest sector the public markets have to offer.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Here are the specific trades you need to execute this position:
Buy 23 June 2020 (GOOGL) $1,520 put at………….………$130.15
Sell short 23 June 2020 (GOOGL) $1,515 put at………….$125.95
Net Cost:……………………..……......................………..…….....$4.20
Potential Profit: $5 - $4.20 = $0.80
(23 X 100 X $0.80) = $1,840 or 18.40%
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 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.
