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) February 2022 $240-$250 in-the-money vertical Bull Call spread at $9.70 or best
Closing Trade
1-27-2022
expiration date: February 18, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contracts
The Dow Average has just pulled off an incredible $1,200 point swing in the strength of ballistic 6.9% GDP growth. Better yet, Microsoft has just soared $30 off its recent bottom.
Never one to lick a gift horse in the mouth, with 75% of the maximum potential profit in hand in only two days, I am inclined to take profits.
I am therefore selling the Microsoft (MSFT) February 2022 $240-$250 in-the-money vertical Bull Call spread at $9.70 or best.
By coming out here, you get to take home $1,080, or 10.22% in 2 trading days. Well done, and on to the next trade.
This was a bet that Microsoft would not fall below $250 by the February 18 options expiration.
Here are the specific trades you need to close out this position:
Sell 12 February 2022 (MSFT) $240 calls at…….........…….………$65.00
Buy to cover short 12 February 2022 (MSFT) $250 calls at…..…$55.30
Net Proceeds:………………………….………..……….................….….....$9.70
Profit: $9.70 - $8.80 = $0.90
(12 X 100 X $0.90) = $1,080 or 10.22% in 2 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.
