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 - Rivian Automotive, Inc. (RIVN) – SELL – TAKE PROFITS
SELL – TAKE PROFITS the Rivian Automotive, Inc. (RIVN) June 2022 $35-40 in-the-money vertical BEAR PUT spread at $4.75
Closing Trade
6-3-2022
expiration date: June 17, 2022
Portfolio weighting: 10%
Number of Contracts = 23 contracts
This was a tactical trade in EV automobile maker Rivian Automotive, Inc. (RIVN) would not rise above $35 in the next 36 days.
This trade accrued profits entirely from time decay as the underlying stock was $5 lower but through the 3 weeks, the stock has seesawed from $25 to $30 and after yesterday’s big up day, I am inclined to take profits here instead of taking my chances through expiration.
Volatile stocks with spreads are positions that need to be closed on volatile days because tomorrow or the next day could go wildly against us.
Just take a look at Tesla whose underlying stock is down around 9% today.
Managing the cushion is an art form that many traders don’t know how to navigate.
I am leaving quite a bit of profit on the table, but it should be that way in treacherous markets.
Most people never go broke by taking a profit.
Here are the specific trades you need to execute this position:
Sell to Close 23 June 2022 (RIVN) $40 puts at………….………$10.10
Buy to Close 23 June 2022 (RIVN) $35 puts at………...........….$5.35
Net Proceeds:……………………......................…….………..…….....$4.75
Profit: $4.75-$4.30 = $.45
(23 X 100 X $.45) = $1,035 or 9.5%
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.
