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) September 2022 $235-$245 in-the-money vertical Bull Call spread at $9.90 or best
Closing Trade
9-9-2022
expiration date: September 16, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contracts
With 91% of the maximum potential profit in hand and a week still to go until the September 16 quadruple witching options expiration, I am going to run for the sidelines.
This trade takes me to a rare 100% cash position, which I believe current conditions justify. I have massive 61% YTD profits to protect and I don’t want to risk them trying to squeeze blood out of a stone.
The cataclysmic Consumer Price Index is out on Tuesday at 8:30 AM EST and as a result, the stock market could be up or down huge.
Since Microsoft fell $3.00 since we added this position, ALL of our profit came from time decay. We also caught a decline in the Volatility Index from $27 to $23.
I love Microsoft for the long term. This was yet another opportunity to buy Cadillacs at Volkswagen prices.
I am therefore selling the Microsoft (MSFT) September 2022 $235-$245 in-the-money vertical Bull Call spread at $9.90 or best.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES. If you can’t get done at this price, lower your offer by 5 cents.
This was a bet that Microsoft will not fall below $245 by the September 16 option expiration in 13 trading days.
Here are the specific trades you need to exit this position:
Sell 12 September 2022 (MSFT) $235 calls at………….....………$26.00
Buy to cover short 12 September 2022 (MSFT) $245 calls at…$16.10
Net Proceeds:………………………….………..……….............….….....$9.90
Profit: $9.90 - $8.90 = $1.00
(12 X 100 X $1.00) = $1,200 or 11.23% in 8 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.
