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) November 2020 $110-$115 in-the-money vertical Bear Put spread at $4.90 or best
Closing Trade
10-28-2020
expiration date: November 20, 2020
Portfolio weighting: 10%
Number of Contracts = 23 contracts
As I expected, Corona fears made it back into the stock market big time. I am still amazed at how fast we made it from complacency to panic, a mere three trading days. As a result, we have a home run in our short position in (JPM), which has plunged $10 in only six trading days.
The shares of banks in general and JP Morgan specifically have tried time and again to breakout to the upside, only to fail every time. I think we have a few more weeks of failure.
Covid-19 is rapidly approaching its third peak. Total US deaths could reach 500,000 by the time it is all over. One heck of a scare for the stock market is coming.
I am therefore selling the JP Morgan (JPM) November 2020 $110-$115 in-the-money vertical Bear Put spread at $4.90 or best. By coming out here, you get to take home $1,150, or 11.36% in 6 trading days
Stock players should keep the shares, which probably have a double in them over the next three years.
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 5 cents with a second order.
This was a bet that JP Morgan (JPM) would not rise above $110 by the November 20 option expiration day in 22 trading days. That is 14% above the current level.
Here are the specific trades you need to exit this position:
Sell 23 November 2020 (JPM) $115 puts at………….…......……$19.00
Buy to cover short 23 November 2020 (JPM) $110 puts at…..$14.10
Net Proceeds:……………………..…….………..………..........….….....$4.90
Profit: $4.90 - $4.40 = $0.50
(23 X 100 X $0.50) = $1,150, or 11.36% in 6 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.
