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 - (MS) – EXPIRATION
EXPIRATION of the Morgan Stanley (MS) April 2023 $65-$70 in-the-money vertical Bull Call spread at $5.00
Closing Trade
4-21-2023
expiration date: April 21, 2023
Number of Contracts = 25 contracts
Just to be clear, this position does not expire until 4:15 PM on Friday, April 21. Since I don’t want to overwhelm you with seven expiration trade alerts all at once, I am feeding this one out today.
However, with the stock now an eye-popping 23% above its nearest strike price, I think it’s safe to call this one a win.
As a result, you get to take home $1,500, or 13.64% in 22 days. Well done and on to the next trade!
I knew full well when the regional banking crisis first hit a month ago, stocks were wildly overreacting to the downside, especially those for brokers and fund managers. That turned out to be the case, with billions of dollars of new deposits pouring into the safety of large bank balance sheets and de facto government guarantees.
It helps also at the time that the Volatility Index ($VIX) had just rocketed to $31 and a Mad Hedge Market Timing Index that just plunged to only 17.
You don’t have to do anything with this expiration.
Your broker will automatically use your long position to cover your short position, canceling out the total holdings.
The entire profit will be credited to your account on Monday morning, April 24 and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
The flight of money right now is from small, undercapitalized, and questionable to large, overcapitalized and rock solid.
This was a bet that Morgan Stanley would not fall below $70.00 by the April 21, 2023 option expiration in 22 days.
Here is the specific accounting you need to close out this position:
EXPIRATION of 25 April 2023 (MS) $65.00 calls at………….….…$21.71
EXPIRATION off short 25 April 2023 (MS) $70.00 calls at…...…$16.71
Net Proceeds:………………….................……….………..………….….....$5.00
Potential Profit: $5.00 - $4.40 = $0.60
(25 X 100 X $0.60) = $1,500, or 13.64% in 22 days.
