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 - (NVDA) – STOP LOSS
SELL the NVIDIA (NVDA) May 2024 $960-$970 in-the-money vertical Bear Put debit spread at $8.30 or best
Closing Trade
5-7-2024
expiration date: May 17, 2024
Number of Contracts = 12 contracts
Since I now have substantial profits to protect, we are up 18% on the year on an expiration basis versus 5% for the S&P 500, I am getting more aggressive in my risk control.
The concern here is that (NVDA) keeps rising until the May 22 earnings report. So I am going to use this rare down day to cut my short position in (NVDA) in half.
It is easier to dig yourself out of a small hole than a big one. Call me a chicken, but I’d rather be a live chicken than a dead duck.
I am therefore selling the May 2024 $960-$970 in-the-money vertical Bear Put debit spread at $8.30 or best.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES. Just enter a limit order in between the bid and the offer and work it.
This was a bet that NVIDIA would not rise above $960 by the May 17 option expiration in 8 trading days. Given the immense moves that (NVDA) is making, this is no longer a safe bet.
Here are the specific trades you need to close out this position:
Sell 12 May 2024 (NVDA) $970 puts at……....…….….......……$79.00
Buy to cover short 12 May 2024 (NVDA) $960 puts at......…$70.70
Net Proceeds:………………………….………….…..........................$8.30
Loss: $8.80 - $8.30 = $0.50
(12 X 100 X $0.50) = $600 or 5.68%.
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.
