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 - Invesco QQQ Trust (QQQ) – SELL STOP LOSS
SELL STOP LOSS - Invesco QQQ Trust (QQQ) June 2021 $345-$350 in-the-money vertical BEAR put spread at $4.05
Closing Trade (2nd QQQ PUT SPREAD out of 2)
6-16-2021
expiration date: June 18, 2021
Portfolio weighting: 10%
Number of Contracts = 22 contracts
This was a short-term bet that Invesco QQQ Trust (QQQ) would stay BELOW $345 by June 18th expiration and this position has gone against from the day we executed it. We are doing well to exit with a modest loss.
We broke even on our other QQQ $347-$352 June put spread that we closed out yesterday and now that expiration is just 3 days away, we are one Jerome Powell conference away and him ignoring inflation for markets to shoot higher. Remember he has stated that inflation is transitory and if he acknowledges that, we are off to the races again and tech will respond going higher.
This modest loss stops our run of 8 profitable trades and 1 for no loss. We now have no positions in the tech portfolio and I am inclined to get back in on the long side. We are in a “goldilocks” market and there is a good chance the Nasdaq will grind higher in the short-term.
In the past few weeks, we have taken profits from a slew of bullish call spreads.
I still love technology and they are the long-term difference makers in the economy, but the sector is in the process of being rerated.
If you don’t do options, avoid for now because this is a 14-day trade, but if you hold the ETF, keep it long-term.
Here are the specific trades you need to exit this position:
Sell to Close 22 June 2021 (QQQ) $350 puts at………….………$7.57
Buy to Close 22 June 2021 (QQQ) $345 puts at……........…….$3.52
Net Proceeds:………….................…………..…….………..…….....$4.05
Loss: $4.35 - $4.05 = $.30
(22 X 100 X $.30) = $660 or 6.62%
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.
