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 - (PYPL) – SELL – TAKE PROFITS
SELL the PayPal Holdings, Inc. (PYPL) December 2019 $92.50-$97.50 in-the-money vertical BULL CALL spread at $4.95
Closing Trade
12-12-2019
expiration date: December 20, 2019
Portfolio weighting: 10%
Number of Contracts = 23 contracts
This was a trade that PayPal holdings wouldn’t drop more than 5.5% from November 15 until December 20th and we are exiting from this trade accruing 92.02% of maximum profit.
If you want to pocket the extra 5 cents, then you have a 97.55% chance that PayPal will end December 20th above our upper strike price of $97.50.
This means that we are in 100% cash right at a time that the administration has painstakingly offered to cut existing tariffs on Chinese imports and cancel new levies if Beijing agrees to boost purchases, intellectual-property protection and increase access to China’s financial-services sector.
We were just updated that U.S. negotiators have reached the terms of a phase-one trade deal with China that now awaits President Donald Trump’s approval, according to people briefed on the plans, Bloomberg News reports.
The tech sector has had a tailwind at its back because of the hopes of a deal leading to bullish price action for overall tech shares.
I am still very much in favor of nimbly jumping in and out of solid software stocks which has been my trading strategy for the second half of the year and highly profitable.
It has worked out great and we now have the problem of many of my software darlings that are too expensive, too successful and have too good of price action.
Here are the specific trades you need to execute this position:
Sell 23 December 2019 (PYPL) $92.50 calls at……….............….………$12.87
Buy to cover short 23 December 2019 (PYPL) $97.50 calls at………….$7.92
Net Proceeds:…………...............................…………..…….………..…….....$4.95
Profit: $4.95 - $4.40 = $0.55
(23 X 100 X $0.55) = $1,265 or 12.65%
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.
