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 - (QQQ) – TAKE PROFITS
SELL the Invesco QQQ Trust NASDAQ ETF (QQQ) January 2023 $290-$300 in-the-money vertical BEAR PUT spread at $9.90 or best
Closing trade - NOT FOR NEW SUBSCRIBERS
12-27-2022
expiration date: January 20, 2023
Portfolio weighting: 20%
Number of Contracts = 24 contracts
I had intended to keep this trade all the way to the January 20 option expiration. But with 88.88% of the maximum potential profit in hand in only five trading days, I am going to take the money and run as an extra Christmas present. The risk/reward of continuing is no longer favorable.
I am therefore selling the Invesco QQQ Trust NASDAQ ETF (QQQ) January 2023 $290-$300 in-the-money vertical BEAR PUT spread at $9.10 or best.
By taking profits now, you get to take home $1,920, or 17.58% in 4 trading days. Well done, and on to the next trade!
Tech stocks now have the kiss of death on them and are still expensive relative to the S&P 500 (SPY). That makes them a great short.
Technology will eventually recover in the second half of the year but will have to test lower lows first.
The (QQQ) is the favorite proxy for tech stocks. Its five largest holdings are Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), NVIDIA (NVDA), and Alphabet (GOOG). To learn more about the (QQQ), please click here.
By taking on an options put trade now, you get the benefit of low volatility and time decay over the extended holiday period. There is no point in passing up a sweet trade just because some guy with a white beard in a red suit is about the descend down the chimney.
And let me tell you, starting out the New Year with a big profit in your trading account is the way to go. It lets you trade from a position of strength for the rest of the year.
I don’t see any upside surprises on the horizon that could upset this position. Q4 earnings are about to be released and the sense of foreboding to0 palpable. We also get an assist from the 200-day moving average, which should provide major upside resistance.
This was a bet that the Invesco QQQ Trust NASDAQ ETF S&P 500 (QQQ) would not trade above $290.00 by the January 20 option expiration day in 19 trading days.
Here are the specific trades you need to close this position:
Sell 24 January 2023 (QQQ) $300 puts at………........….………$35.00
Buy to cover short 24 January 2023 (QQQ) $290 puts at…….$25.10
Net Proceeds:………………………….………..………….............….....$9.90
Profit: $9.90 - $9.10 = $0.80
(24 X 100 X $0.80) = $1,920, or 17.58% in 4 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.
