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) October 2019 $1,100-$1,130 in-the-money vertical bull call spread at $29.80 or best
Closing Trade
10-11-2019
expiration date: October 18, 2019
Portfolio weighting: 10%
Number of Contracts = 4 contracts
I am going to use the monster 475 point rally in the Dow Average, the biggest since June, to cash in on my long position in Google (GOOGL). We are now 8.9% above our nearest strike price with only five trading days until expiration.
The risk/reward of continuing is no longer favorable. As a client told me only just this morning, no one ever got fired for taking a profit. She is dead right.
Therefore, I am selling the Alphabet (GOOGL) October 2019 $1,100-$1,130 in-the-money vertical bull call spread at $29.80 or best. By coming out here, you get to capture 95% of the maximum potential profit in this position. That works out to $1,520 or 14.62% in 6 trading days.
Well done and on to the next trade.
This was a bet that the Alphabet (GOOGL) would not trade below $1,130 by the October 18 option expiration day in 11 trading days. An extremely short time to expiration gave us a very high chance of making money here.
Here are the specific trades you need to execute this position:
Sell 4 October 2019 (GOOGL) $1,100 calls at……….......….....…$130.00
Buy to cover short 4 October 2019 (GOOGL) $1,130 calls at….$100.20
Proceeds:……................…………………….………..………….….........$29.80
Profit: $29.80 - $26.00 = $3.80
(4 X 100 X $3.80) = $1,520 or 14.62% in 6 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.
