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) – TAKE PROFITS
SELL the JP Morgan (JPM) July 2020 $80-$85 in-the-money vertical Bull Call spread at $4.90 or best
Closing Trade – NOT FOR NEW SUBSCRIBERS
7-10-2020
expiration date: July 17, 2020
Portfolio weighting: 10%
Number of Contracts = 23 contracts
I am going to use the $4.10 spike in JP Morgan Shares this morning to take profits.
We are close to maxing out our profit in this position at 80%. It gets me out ahead of the potential black swan of the coming Tuesday Q2 earnings report. We really cleaned up on the accelerated time decay on this one. And it brings me home a nice profit in only five trading days, something that should never be poo-pooed. Can’t get enough of those!
If the economy is truly getting better, as last week’s blockbuster June Nonfarm Payroll Report at 4.8 million indicated, then you'd want to buy the banks with both hands.
That means interest rates will rise, bond prices will fall, and the default rates now plaguing banks will shrink. Oh, and stocks keep going up too.
I am therefore selling the JP Morgan (JPM) July 2020 $80-$85 in-the-money vertical Bull Call spread at $4.90 or best. By coming out here, you get to take home $920, or 8.89% in 5 trading days.
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 decrease your offer by 10 cents with a second order.
If you don’t get done at these prices, simply wait five more days and collect the entire $5.00 premium on the July 17 expiration.
This was a bet that JP Morgan (JPM) would not trade below $85 by the July 17 option expiration day in 10 trading days, which is looking like a pretty sure thing right now.
Here are the specific trades you need to exit this position:
Sell 23 July 2020 (JPM) $80 calls at………….………$15.50
Buy to cover short 23 July 2020 (JPM) $85 calls at……..$10.60
Net Cost:……………………..…….………..………….….....$4.90
Profit: $4.90 - $4.50 = $0.40
(23 X 100 X $0.40) = $920, or 8.89% in 5 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 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.
