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 2021 $120-$125 in-the-money vertical Bull Call spread at $4.20 or best
Closing Trade
1-29-2021
expiration date: February 19, 2021
Portfolio weighting: 10%
Number of Contracts = 24 contracts
I have delivered the strongest start to a New Year in the 13-year history of the Mad Hedge Fund Trader. I’d like to keep it that way.
When markets de-risk, so do I, which has been prompted by the advent of out-of-the-blue short squeezes triggering 1,000-point drops in the market.
The only risk to my performance over the next 14 days is my long position in JPM Morgan (JPM). The upper strike price is only $6.40 away, which could easily get covered by a bad opening. All our other positions are so far in the money that they are essential in the bag for the February 19 options expirations.
I am therefore selling the JP Morgan (JPM) February 2021 $120-$125 in-the-money vertical Bull Call spread at $4.20 or best.
I’ll be back into the trade soon.
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.
Covid-19 is rapidly approaching its third peak. Total US deaths could exceed the 1919 Spanish Flu 625,000 peak by the time it is all over. We passed the WWII deaths last week.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and lower your offer by 10 cents with a second order.
This was a bet that JP Morgan (JPM) would not fall below $125 by the February 19 option expiration day in 18 trading days.
Here are the specific trades you need to exit this position:
Sell 24 February 2021 (JPM) $120 calls at………….….....……$12.00
Buy to cover short 24 February 2021 (JPM) $125 call at…....$7.80
Net Proceeds:................……………..…….………..………….….....$4.20
Loss: $4.20 - $4.20 = $0.00
(24 X 100 X $0.00) = $0 or 0%.
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.
