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 - (GS) – TAKE PROFITS
SELL the Goldman Sachs (GS) May 2021 $310-$320 vertical bull call spread at $9.80 or best
Closing Trade
5-6-2021
expiration date: May 21, 2021
Portfolio weighting: 10%
Number of Contracts = 12 contracts
Since I added this position 8 days ago, the shares have gone straight up virtually every day. We are now up a gargantuan $40 above the nearest strike price with only ten days left until the May 21 options expiration.
With 87% of the maximum potential profit in hand, the risk/reward of continuing is no longer favorable. By coming out here, you get to take home an impressive $1,560, or 15.29% in 8 trading days.
So, I’ll take the home run here and free up cash to go into a more profitable position.
I am therefore selling the Goldman Sachs (GS) May $310-$320 vertical bull call spread at $9.80 or best.
Well done and on to the next trade.
Goldman Sachs just announced earnings and they couldn’t be more pristine.
Q1 net revenues came to an eye-popping $7.7 billion. Earnings per share amounted to $18.60, up an astonishing 500% from a year ago. Return on equity was 31%. It doesn’t get any better than that.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done cancel your order and lower your offer by 5 cents with a second order.
This was a bet that Goldman will not trade below $320 by the May 21 option expiration day in 19 trading days.
Here are the specific trades you need to exit this position:
Sell 12 May 2021 (GS) $310 calls at……….........….………$50.00
Buy to cover short 12 May 2021 (GS) $320 calls at…....$40.20
Net Proceeds:………..…….………..……...............…….….....$9.80
Profit: $9.80 - $8.50 = $1.30
(12 X 100 X $1.30) = $1,560, or 15.29% in 8 trading days.
If you are uncertain about 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.
