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) December 2018 $95-$100 in-the-money vertical BULL CALL spread at $4.85 or best
Closing Trade
12-20-2018
expiration date: December 21, 2018
Portfolio weighting: 10%
Number of Contracts = 22 contracts
With only one more day until the December expiration, the risk/reward of continuing with this position in these chaotic trading conditions is no longer favorable. This is a time when they are shooting all the generals.
I am therefore selling the Microsoft (MSFT) December 2018 $95-$100 in-the-money vertical BULL CALL spread at $4.85 or best.
This was a bet that the Microsoft (MSFT) will not trade below $100 by the December 21 option expiration day in 15 trading days. It worked.
If you have the stock, sell it for the short term but keep it for the long term. This stock eventually has a double in it.
Well done and on to the next trade. You are one of the only people making money is this market meltdown.
Here are the specific trades you need to exit this position:
Sell 22 December 2018 (MSFT) $95 calls at………….………$8.20
Buy to cover short 22 December 2018 (MSFT) $100 calls at….$3.35
Net Proceeds:………………………….………..………….….....$4.85
Profit: $4.85 - $4.50 = $0.35
(22 X 100 X $0.35) = $770 or 7.77% in 14 trading days.
To see how to enter this trade in your online platform, please look at the order ticket above, 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 Vertical Call and Put Debit Spreads by clicking here.
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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
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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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.