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 AT MAX PROFIT
EXPIRATION of the Morgan Stanley (MS) February 2021 $55-$60 in-the-money vertical Bull Call spread at $5.00
Closing Trade– NOT FOR NEW SUBSCRIBERS
2-22-2021
expiration date: February 19, 2021
Portfolio weighting: 10%
Number of Contracts = 24 contracts
I’m just cleaning up the last of the expiring Friday option positions. This option call spread expired last Friday, but there were too many positions expiring at max profit last week to send out in a single day.
Since we added this position, (MS) appreciated by $7.39. As a result, you get to take home $2,400, or 25.00% in 14 trading days.
You don’t have to do anything with this expiration.
Your broker (are they still called that?) 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, February 22 and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
This was an aggressive trade. But the payoff was so enormous that it’s worth 14 days of exposure.
Morgan Stanley announced blockbuster earnings and the shares sold off big. It was a classic “Buy the rumor, sell the news” type move.
That has given us a gift. (MS) is the class act in the brokerage and fund management sector, which I helped personally build out some 40 years ago.
Yes, back then, I got Morgan Stanley into Japan when the Nikkei Average was only at 3,000 on its way to 39,000. The memory still titillates.
I believe that massive government borrowing and spending will drive US interest rates up through the roof and the value of the US dollar (UUP) down. Brokers love the massive stock market volume this generates because they vastly improve profit margins.
Covid-19 is rapidly approaching its third peak. Total US deaths could exceed the 1919 Spanish Flu 625,000 peak by the time it is all over. We passed all WWII deaths sometime ago.
This was a bet that JP Morgan (JPM) would not fall below $60 by the February 19 option expiration day in 14 trading days.
Here are the specific trades you need to close out this position:
EXPIRATION of 24 February 2021 (MS) $55 calls at………….………$14.41
EXPIRATION of short 24 February 2021 (MS) $60 puts at………....$9.41
Net Proceeds:…………………..........…….…..…….………..………….….....$5.00
Profit: $5.00 - $4.00 = $1.00
(24 X 100 X $1.00) = $2,400 or 25.00% in 14 trading days.
