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) – SELL – STOP LOSS
SELL Microsoft Corporation (MSFT) March 2020 $150-$155 in-the-money vertical BULL call spread at $3.53
Closing Trade
3-6-2020
expiration date: March 20, 2020
Portfolio weighting: 10%
Number of Contracts = 23 contracts
Tech market is down another 3% as the coronavirus pandemic roils tech shares.
These types of moves are seldom and Microsoft shares are acting irrational devoid of common sense.
Risk control is the order of the day as we try to keep our seat at the table.
This is why we do spreads.
Microsoft had a large buffer zone and couldn’t stave off the risk-off move and most of it has been decimated.
The Nasdaq keeps trending lower as traders don’t want to expose themselves to a weekend of headline.
We are stopping out here as the price action goes from bad to worse on the Nasdaq going into the close.
Here are the specific trades you need to execute this position:
Sell 23 March 2020 (MSFT) $150 call at…..............……….………$13.65
Buy to Cover Short 23 March 2020 (MSFT) $155 call at………….$10.12
Net Proceeds:………........................……………..…….………..…….....$3.53
Loss: $4.2 - $3.53 = -$.67
(23 X 100 X -$.67) = -$1,541 or -15.41%
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.
