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) – SELL
BUY the JP Morgan (JPM) October 2020 $85-$90 in-the-money vertical Bull Call spread at $4.30 or best
Closing Trade
9-21-2020
expiration date: October 16, 2020
Portfolio weighting: 10%
Number of Contracts = 23 contracts
There was a report out over the weekend accusing major banks of a multi-trillion dollar money laundering scheme.
Given the heightened risk profile in the market in the wake of the passing of Ruth Bader Ginsberg going into the election, I am going to bail on this position. Discretion is the better part of valor.
I am therefore selling the JP Morgan (JPM) October 2020 $85-$90 in-the-money vertical Bull Call spread at $4.30 or best. At this price, you are coming out at cost.
Going into a crisis with 100% cash is a wonderful thing. It clears the mind and allows you to take advantage of the best opportunities coming out the other side of this. You get to take on new positions when everyone else is throwing up on their shoes.
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 trade below $90 by the October 16 option expiration day in 19 trading days.
Here are the specific trades you need to exit this position:
Sell 23 September 2020 (JPM) $85 calls at………….....….……$11.60
Buy to cover short 23 September 2020 (JPM) $90 calls at…..$7.30
Net Proceeds:……………………..…….….........……..………….….....$4.30
Profit: $4.30 - $4.30 = $0.00
(23 X 100 X $0.00) = $0, or 0%.
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.
