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 Alert - Microsoft Corporation (MSFT) – STOP LOSS
SELL Microsoft Corporation (MSFT) August 2023 $317.50-$322.50 in-the-money vertical BULL CALL spread at $3.20
Closing Trade
8-9-2023
expiration date: August 18, 2023
Portfolio weighting: 10%
Number of Contracts = 25 contracts
This was a short-term aggressively bullish trade on AI firm Microsoft (MSFT) and MSFT stock has fallen apart as a slew of bad news has hit the wider economy and the tech sector.
The tech sector is cooling down from its epic performance in the first half of the year and we are cutting losses here as the underlying stock is near our upper strike price.
Here are the specific trades you need to exit this position:
Sell to Close 25 August 2023 (MSFT) $317.50 calls at………….………$9.00
Buy to Close 25 August 2023 (MSFT) $322.50 calls at………........….$5.80
Net Proceeds:……………………..…….………..…............................….....$3.20
Loss: $4.00-$3.20 = -$0.80
(25 X 100 X $0.80) = $2,000 or 20.00%
If you are uncertain on 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.
