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.
Tech Trade Alert - (KLAC) – SELL – TAKE PROFITS
SELL the KLA Corporation (KLAC) September 2019 $150-$155 in-the-money vertical BEAR PUT spread at $4.65 or best
Closing Trade
8-13-2019
expiration date: September 20, 2019
Portfolio weighting: 10%
Number of Contracts = 22 contracts
KLA Corporation (KLAC) designs, manufactures, and markets process control and yield management solutions for the semiconductor and related nanoelectronics industries worldwide.
It just so happens that they procure 44% of total revenue from Greater China and that isn’t something to be all that happy these days.
The Office of the U.S. Trade Representative announced Tuesday that products including “cellphones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing” would not be hit with a 10% tariff until December 15.
Originally, President Donald Trump announced at the start of August that he would be imposing a 10% tariff on $300 billion worth of Chinese imports starting September 1, which would have included many of these items.
This means to bail out of chips on the short side – good thing we bought it at a great price before on the softness.
Semis should do well short-term after this announcement.
I am selling this for 50 cents profit.
Here are the specific trades you need to execute this position:
Sell 22 September 2019 (KLAC) $155 puts at ……..............…….………$20.65
Buy to Cover short 22 September 2019 (KLAC) $150 puts at………….$16.30
Net Proceeds:…………………….………..……............................................$4.65
Potential Profit: $4.65 - $4.15 = $0.50
(22 X 100 X $0.50) = $1,100 or 1.10%
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on “How to Execute a Vertical Bull Call Spread” by clicking here at
http://www.madhedgefundtrader.com/ltt-vbpds/
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.
