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) – STOP LOSS
SELL the JP Morgan (JPM) February 2022 $140-$150 in-the-money vertical Bull Call spread at $7.40 or best
Trade Date: 1-19-2022
Expiration Date: February 18, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contracts
Risk control is going to be the order of the day every day in 2022. (JPM) just broke my upper strike at $150, opening up exponential losses in this position. I am therefore stopping out of the position.
I am therefore selling the JP Morgan (JPM) February 2022 $140-$150 in-the-money vertical Bull Call spread at $7.40 or best
(JPM) is the class act in the global banking sector, and CEO Jamie Diamond is the best CEO in the country. Not only that, with rocketing interest rates, we are just entering the golden age of the banking sector.
However, I am not going to argue with Mr. Market with 22 days to the February option expiration.
I believe that massive government borrowing and spending will drive US interest rates up through the roof and the value of the US dollar (UUP) down. Banks love high interest rates because they vastly improve profit margins.
This was a bet that JP Morgan (JPM) will not fall below $150.00 by the February 18 option expiration day in 23 trading days.
Here are the specific trades you need to exit this position:
Sell 12 February 2022 (JPM) $140 calls at……….....….…..……$11.00
Buy to cover short 12 February 2022 (JPM) $150 calls at…....$3.60
Net Proceeds:………………….......…..…….………..……..…….….....$7.40
Loss: $8.50- $7.40 = -$1.10
(12 X 100 X $1.10) = -$1,320.
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.
