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 - (NFLX) – STOP LOSS
SELL the Netflix (NFLX) November 2018 $300-$320 in-the-money vertical BULL CALL spread at $14.70 or best
Closing Trade
10-22-2018
expiration date: November 16, 2018
Portfolio weighting: 10%
Number of Contracts = 6 contracts
To see the Netflix drop this fast in the wake of blockbuster earnings last week is nothing less than astounding. But that is the market we are in right now and this level of volatility could continue ten more trading days into the midterm elections. You have to trade the market you have, not the one you want.
So, I am going to cut my risk here for a small loss and stop out of my position in the Netflix (NFLX) November 2018 $300-$320 in-the-money vertical BULL CALL spread at $14.70 or best.
We will live to fight another day. I was obviously way too aggressive in chasing this position.
If you bought the stock for a quick trade into yearend sell for the short term but hold for the long term.
This was a bet that Netflix (NFLX) will not trade below $320 by the November 16 option expiration day in 19 trading days. That was a level 23.80% down from the $420 July top.
Here are the specific trades you need to execute this position:
Sell 6 November 2018 (NFLX) $300 calls at………….………$35.00
Buy to cover short 6 November 2018 (NFLX) $320 calls at….$20.30
Net Proceeds:………………………….………..………….
Loss: $17.20 - $14.70 = $2.50
(6 X 100 X $2.50) = $1,500 or 14.53%.
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.
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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 it done, don’t worry. There are another 250 Trade Alerts coming at you over the coming 12 months.
