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 - Intel Corporation (INTC) – SELL
SELL – STOP LOSS - Intel Corporation (INTC) January 2021 $54-$57 in-the-money vertical BEAR put spread at $0.83
Closing Trade – NOT FOR NEW SUBSCRIBERS
1-13-2021
expiration date: January 15, 2021
Portfolio weighting: 10%
Number of Contracts = 37 contracts
Intel (INTC) is doing so bad that they used this morning to announce a change at CEO and unfortunately for us, INTC stock is up big this morning.
We are unlucky on this trade and sometimes black swans of this nature catch us by surprise.
We will take a big loss on this trade and it is truly an anomaly for the Mad Hedge Tech Alert service.
CEO Bob Swan is poised to step down from his role at INTC in February and VMWare CEO Pat Gelsinger (VMW) is set to take over the position.
Last year was a terrible year for Swan saying during the company’s last earnings call that 2020 had been “the most challenging year” in his career.
Over the past year, disruptions due to the pandemic compounded with the company’s own delays in producing its next generation of smaller, more powerful 7-nanometer chips.
In mid-2020, Intel said initial production shipments of these chips would begin in late 2022 or early 2023, a year behind the company’s previous schedule, while competitor AMD (AMD) had already begun selling its 7-nanometer processors.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES AND DO NOT BUY THE STOCK.
Here are the specific trades you need to execute this position:
SELL 37 January 2021 (INTC) $57 puts at………...........….………$1.04
Buy to Cover Short 37 January 2021 (INTC) $54 puts at………….$.21
Net Proceeds:…………………......................…..…….………..…….....$.83
Loss: $2.66 - .83 = -$1.83
(37 X 100 X $1.83) = -$6,771 or 68.8%
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.
