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 Trade Alert - Micron Technology, Inc. (MU) – SELL – STOP LOSS
SELL Micron Technology, Inc. (MU) September 2019 $47-$50 in-the-money vertical BEAR PUT spread at $2.35 or best
Closing Trade
8-13-2019
expiration date: September 20, 2019
Portfolio weighting: 10%
Number of Contracts = 40 contracts
Micron is levered to China Inc. procuring 51% of revenue from mainland China.
This was a bet that Micron won’t break out to August 2018 levels, we had to put the breaks on this trade because of breaking news about tariff delays.
The situation changes that fast these days.
If you haven’t heard, the Office of the U.S. Trade Representative announced this morning that products including “cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing” would not be hit with a 10% tariff until December 15.
Originally, President Donald Trump announced at the start of August that he would be imposing a 10% tariff on $300 billion worth of Chinese imports starting September 1, which would have included many of these items.
The stock popped over 6.5% in morning trading and has fortunately retraced ,meaning this exit point will claw us some of our losses back with just a 15-cent loss leaving the tech portfolio with mostly short dated, deep in-the-money call spreads with short duration.
It’s time to get out of semis for the short term upon this announcement.
Here are the specific trades you need to execute this position:
Sell 40 September 2019 (MU) $50 put at…………....…..……$6.87
Buy to cover short 40 September 2019 (MU) $47 put at….$4.52
Net Proceeds:…...........…………………..…….…………..…….....$2.35
Loss: $2.50 - $2.35= -$.15
(40 X 100 X -$.15) = $600 or -.60%
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 at
http://www.madhedgefundtrader.com/ltt-vbpds/
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.
