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 - (MSFT) – TAKE PROFITS
SELL the Microsoft (MSFT) May 2021 $220-$230 in-the-money vertical Bull Call spread at $9.75 or best
Closing Trade
4-19-2021
expiration date: May 21, 2021
Portfolio weighting: 10%
Number of Contracts = 12 contracts
Since we added this position two weeks ago, (MSFT) has risen nine of ten days. The risk-reward in continuing with the spread is no longer favorable. Better to lock in profits here so we have dry powder on any correction.
By coming out here, you get to take home 84.37% of the maximum potential profit. That means taking home $1,620, or 19.04% in only 10 trading days.
I am therefore selling the Microsoft (MSFT) May 2021 $220-$230 in-the-money vertical Bull Call spread at $9.75 or best.
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 decrease your offer by 10 cents with a second order.
This was a bet that Microsoft (MSFT) would not trade below $230 by the May 21 option expiration day in 28 trading days.
Here are the specific trades you need to exit this position:
Sell 12 May 2021 (MSFT) $220 calls at……….........….………$41.00
Buy to cover short 12 May 2021 (MSFT) $230 calls at……..$31.25
Net Proceeds:………………............……..…….………..…….….....$9.75
Profit: $9.75 - $8.40 = $1.35
(12 X 100 X $1.35) = $1,620, or 19.04% in 10 trading 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.
