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 $1,495-$1,500 in-the-money vertical BEAR put spread at $4.35
Opening Trade
5-15-2020
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 mentioned in my previous trade alert that I would be inclined to add another GOOGL put spread juxtaposed against my GOOGL call spread.
Well, that time is now, I am choosing the same strike prices as last time and as readers start to get more option-savvy, feel free to use a mix of strike prices that suit your own risk profile.
We are trading around our cornerstone 6/ $1280-$1285 GOOGL call spread that has a higher maximum profit than any of these put spreads and will profit the most if GOOGL can keep its head above water.
I have already taken profits on 2 GOOGL short-term put spreads, but I would rather GOOGL cruise upwards in order to harvest maximum profits in the call spread.
Some of my subscribers told me yesterday they got into the same call spreads 20 cents lower than I did on the rapid market dip when Google dropped to $1,320.
Moving forward, we must prepare ourselves for a barrage of bad news similar to the retail news of today.
The Fed put means we cannot be not long and taking profits on these short-term dips with put spreads is how we can accrue beta.
Again, we are putting an assortment of spreads together in the portfolio because of the unusual conditions we are in with Nasdaq nearing all-time highs but with unprecedented economic news.
Do not chase prices if they run away.
If there is more consolidation in Google, cutting losses in the call spread will be warranted. Capital preservation is the call of the day.
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) $1,500 put at………….………$139.15
Sell short 23 June 2020 (GOOGL) $1,495 put at………….$134.85
Net Cost:……………………..…….………..…….....$4.35 ($4.30 is midpoint)
Potential Profit: $5 - $4.35 = $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 below, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on 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.
