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 Goldman Sachs (GS) TAKE PROFITS
SELL the Goldman Sachs (GS) September, 2017 $235-$240 in-the-money vertical bear put spread at $4.94 or best
Closing Trade-NOT FOR NEW SUBSCRIBERS
9-5-2017
expiration date: September 15, 2017
Portfolio weighting: 10%
Number of Contracts = 23 contracts
As I expected, Goldman Sachs (GS) shares have traded flat as a pancake since I strapped on this position 17 trading days ago.
I am going to use the latest fears of a North Korean nuclear missile strike and the risks of a category 5 Hurricane Irma hitting Florida to take profits on my short position.
Using this morning's prices, we can now reap 89.09% of the maximum potential profit.
With only eight trading days left to expiration, the risk/reward of continuing is no longer favorable.
So I am selling my position in the Goldman Sachs (GS) September, 2017 $235-$240 in-the-money vertical bear put spread at $4.94 or best.
We earned a 11.01% on this trade in only 17 trading days in this position.
It helped that the yield on the ten-year Treasury bond hit a new 2017 low at 2.09%. Financial need HIGHER interest rates to boost profits.
A short position in (GS) is essentially a long on the bond market.
This was a bet that the (GS) wouldn't move above $235 over the 24 trading days, compared to the then current $222.89.
As I write this, the (GS) is trading at $220.57, or down 1.04%.
I think the shares of financials will double over the next three years as higher rates eventually kick in.
We are already on our way. The Fed will almost certainly raise rates onSeptember 18 by another 25 basis points.
Taking profits now also allows us to later take advantage of the volatility surrounding that decision.
Please note also that this was one leg of an Iron Condor, a bet that a stock won't move up OR down substantially over a short period of time.
You can most profitably add Iron Condors during big volatility spikes, like the one we got in August. It just so happened that we nailed the top of that move.
I will take profits on the remaining long leg during the next (GS) rally.
This was in fact one of MANY different ways we took advantage of the recent spike in the Volatility Index (VIX) up to $17.
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 How to Execute a Vertical Bear Put Spread by clicking here http://members.
You must be logged into your account to view the video.
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.
Be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today's market, investors need every advantage they can get.
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 with only 14 days 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.
Here are the specific trades you need to execute this position:
Sell 23 September, 2017 (GS) $240 puts at..................$19.80
Buy to cover short 23 September, 2017 (GS) $235 puts at.............$14.86
Net Proceeds:.......................................................................$4.94
Profit: $4.94 - $4.45 = $0.49
(23 X 100 X $0.49) = $1,127 or 10.91% profit in 17 trading days.
