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) - SELL
SELL – TAKE PROFITS the Alphabet Inc. (GOOGL) June 2020 $1,515-$1,520 in-the-money vertical BEAR put spread at $4.85
Closing Trade
5-13-2020
expiration date: June 19, 2020
Portfolio weighting: 10%
Number of Contracts = 23 contracts
This was a short-term put spread that GOOGL will go sideways to down by June expiration.
We hedged our long GOOGL position and no better to hedge it with another GOOGL position.
There has been a major risk-off trade in big tech the last 2 trading days and I am taking profits in the put spread and looking to execute another put spread if the market gives me a good entry point.
In no way does this risk-off price action mean that Google has underlying problems.
Investors are simply taking profits right now after a massive run-up.
There is no reason that a trader should be betting the ranch that tech will go straight up right now. That trade was last month.
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:
Sell 23 June 2020 (GOOGL) $1,520 put at………….….............……$167.80
Buy to cover short 23 June 2020 (GOOGL) $1,515 put at………….$162.95
Net Proceeds:……………………..…….………..……................................$4.85
Profit: $4.85 - $4.20 = $0.65
(23 X 100 X $0.65) = $1,495 or 14.95%
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.
