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) – TAKE PROFITS
SELL the Morgan Stanley (MS) October 2022 $67.50-$72.50 in-the-money vertical Bull Call spread at $4.50 or best
Closing Trade
10-10-2022
expiration date: October 21, 2022
Number of Contracts = 25 contracts
With the failure of the rally last Friday and bank earnings out this Friday, I am cutting my exposure to financials by half. I am cutting Morgan Stanley specifically because it has extra risk in case Elon Musk’s Twitter takeover goes through.
At least we got four days of time decay, which these days is worth quite a lot.
(MS) is the class act in the global investment banking sector, and CEO James Gorman is the best CEO in the sector. I helped personally build out some of the key fund management and trading infrastructure some 40 years ago and the profits are now kicking in big time.
And here is the sweet spot. Fears of a recession have knocked $36, or 33% off the $108 high in (MS) shares this year. To learn more about the company, please visit their website at https://www.morganstanley.com.
I am therefore selling the Morgan Stanley (MS) October 2022 $67.50-$72.50 in-the-money vertical Bull Call spread at $4.50 or best
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES. Just enter a limit order and work it.
This was a bet that Morgan Stanley will not fall below $72.50 by the October 21 options expiration in 11 days.
Here are the specific trades you need to close out this position:
Sell 25 October 2022 (MS) $67.50 calls at…………............………$12.00
Buy to cover short 25 October 2022 (MS) $72.50 calls at…………$7.50
Net Proceeds:………….......……………….………..………….….....$4.50
Profit: $4.50 - $4.40 = $0.10
(25 X 100 X $0.10) = $250, or 2.27% in 2 days.
If you are uncertain about 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.
