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 - (MSFT) – SELL – STOP LOSS
SELL the Microsoft (MSFT) September 2019 $120-$125 in-the-money vertical BULL CALL spread at $4.18 or best
Closing Trade
8-5-2019
expiration date: September 20, 2019
Portfolio weighting: 10%
Number of Contracts = 22 contracts
This trade got hijacked once the new 10% tariffs were applied to the last tranche of $300 billion of Chinese goods.
Time to get out now to establish a net bearish stance.
China retaliates against the U.S. by unraveling their tightly controlled currency. The Chinese Yuan falls past the psychologically important threshold of $7 to 1 Yuan and markets are fretting over the broad-based carnage this could do to American companies.
This is a market-wide risk off move in the short-term and many investors are expecting Trump to gear up his Twitter account for a counterattack which could meaning tougher conditions in 2019 for the multinational corporation.
Microsoft is still a great company, so don’t give up on it long-term.
(MSFT) easily has a double in it over the next three years. It is rapidly gaining market share in the burgeoning Internet cloud at the expense of leader Amazon (AMZN).
(MSFT) has also successfully converted its business model from a one-time-only software sale to an immensely profitable annual subscription service.
Its CEO Satya Nadella is a genius and is responsible for the turnaround of Microsoft over the last four years. We have already earned a double in the share price off the back of his Herculean efforts.
I have another six stocks like this that I will be issuing trade alerts in a similar scenario.
Here are the specific trades you need to execute to obtain a $10,000 position.
Sell 22 September 2019 (MSFT) $120 calls at……....................…….… $14.50
Buy to cover short 22 September 2019 (MSFT) $125 calls at…………. $10.32
Net Proceeds:………………………….………..………….........................….....$4.18
Loss: $4.40 - $4.18= $0.22
(22 X 100 X $0.22) = $484
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.
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.
