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) – SELL-TAKE PROFITS
SELL the Microsoft (MSFT) February 2019 $85-$90 in-the-money vertical BULL CALL spread at $4.90 or best
Closing Trade
1-25-2019
expiration date: February 15, 2019
Portfolio weighting: 10%
Number of Contracts = 25 contracts
I am going to use the $1.50 pop in Microsoft this morning to take the win on my long position.
I am therefore selling the Microsoft (MSFT) February 2019 $85-$90 in-the-money vertical BULL CALL spread at $4.90 or best.
With 90% of the maximum potential profit in hand, the risk/reward for carrying on for 15 more trading days is no longer favorable.
By coming out here, you get to earn a whopper of a profit, some $2,250 or 22.50%, in 17 trading days. Well done and on to the next trade.
With February fast approaching, its prudent to go for the bird in the hand versus the 1.1 birds in the bush. You remember what happened last February, don’t you? What’s more, the markets are headed into next month at new 2019 highs on ever declining volume with none of the major political issues resolved. It’s not a pretty picture.
This was a bet that Microsoft (MSFT) would not trade below $90 by the February 15 option expiration in 29 trading days.
If you don’t do options, bought the stock outright, sell it for the short term but keep it for the long term. (MSFT) eventually has a double in it. It is one of the best public companies around.
Here are the specific trades you need to exit this position:
Sell 25 February 2019 (MSFT) $85 calls at………….………$22.00
Buy to cover short 25 February 2019 (MSFT) $90 calls at….$17.10
Net Proceeds:………………………….………..………….….....$4.90
Profit: $4.90 - $4.00 = $0.90
(25 X 100 X $0.90) = $2,250 or 22.50% in 17 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.
You must be logged into your account to view the video.
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.
