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 - (JPM) - BUY
BUY the JP Morgan (JPM) April, 2018 $95-$100 in-the-money vertical bull call spread at $4.55 or best
Opening Trade
4-4-2018
expiration date: April 20, 2018
Portfolio weighting: 10%
Number of Contracts = 22 contracts
The names in our trading book are holding up remarkably well, given the down 480-point Dow Average opening this morning.
What is more important is what is NOT going up, and that would be bonds. The (TLT) is up a scant 35 basis points, despite the massive "RISK OFF" move this morning.
Which means that bond prices are peaking here and are about to collapse once again, taking yields to new highs.
And rising interest rates bring only one kneejerk reaction from me: buy banks.
JP Morgan is the crown jewel in the financial sector, and this is the first time it has fallen enough for me to buy it in a long time. We have the initial sweetener in that we have blockbuster Q1 2018 earnings to be announced the morning of April 13.
We also have huge downside support on the chart at the 200-day moving average at $100, our upper strike price in this spread.
Therefore I am buying the Morgan (JPM) April, 2018 $95-$100 in-the-money vertical bull call spread at $4.55 or best.
This is a bet that (JPM) will not trade below $100 by the April 20 option expiration in 12 trading days. If you can't trade options, just buy the stock outright for a quick bounce.
Don't pay more than $4.75 for this position or you'll be chasing.
Here are the specific trades you need to execute this position:
Buy 22 April 2018 (JPM) $95 calls at..............$12.80
Sell short 22 April 2018 (JPM) $100 calls at.....$8.25
Net Cost:..........................................................$4.55
Potential Profit: $5.00 - $4.55 = $0.45
(22 X 100 X $0.45) = $990 or 9.89% in 12 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.
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 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.