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) February 2023 $300-$310 in-the-money vertical BEAR PUT spread at $9.80 or best
Closing Trade
1-19-2023
expiration date: February 17, 2023
Portfolio weighting: 10%
Number of Contracts = 12 contracts
I love taking two-day profits.
Since we added this position on Tuesday, the (QQQ) has dropped by $10.43. As a result, we now have 75% of the profit in hand. The risk/reward of continuing for another month is no longer favorable.
With the Volatility Index ($VIX) this low, you are able to take quick profits on small moves because you are buying back volatility cheap.
I am therefore selling the Invesco QQQ Trust NASDAQ ETF (QQQ) February 2023 $300-$310 in-the-money vertical BEAR PUT spread at $9.80 or best.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
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 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.
This was a bet that the Invesco QQQ Trust NASDAQ ETF S&P 500 (QQQ) would not trade above $300.00 by the February 17 option expiration day in 23 trading days.
Here are the specific trades you need to exit this position:
Sell 12 February 2023 (QQQ) $310 puts at………….......………$35.00
Buy to cover short 12 February 2023 (QQQ) $300 puts at….$25.20
Net Proceeds:………………………….……….............………….….....$9.80
Profit: $9.80 - $9.20 = $0.60
(12 X 100 X $0.60) = $720 or 6.52% in 2 trading days.
If you are uncertain on 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.
