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 - International Business Machines Corporation (IBM) – SELL – TAKE PROFITS
SELL – TAKE PROFITS International Business Machines Corporation (IBM) September 2020 $130-$135 in-the-money vertical BEAR PUT spread at $4.60
Closing Trade
9-4-2020
expiration date: September 18, 2020
Portfolio weighting: 10%
Number of Contracts = 23 contracts
IBM almost blew by our $130 a few days ago and now that it’s back around $121, I will take profits.
Tech markets are volatile, and these swings mean we need to take profits or cut losses prematurely
I am not high on IBM’s short-term prospects and the company keeps delivering negative revenue growth year-over-year.
Sell 23 September 2020 (IBM) $135 puts at……….............….………$13.35
Buy to cover short 23 September 2020 (IBM) $130 puts at………….$8.75
Net Proceeds:…………………....................……….………..………….….....$4.60
Profit: $4.60 - $4.35 = $0.25
(23 X 100 X $0.25) = $575 or 5.75%
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 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.
