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 - (ROKU) – TAKE PROFITS
SELL the Roku (ROKU) November 2018 $40-$45 in-the-money vertical BULL CALL spread at $4.80 or best
Closing Trade
11-5-2018
expiration date: November 16, 2018
Portfolio weighting: 10%
Number of Contracts =24 contracts
Last week, I proved that selling Apple shares BEFORE the earnings report, no matter how good it may be, was the prudent thing to do. Apple cratered after reporting record profits on November 1.
The same applies to ROKU (ROKU), which reports earnings on November 7, except that ROKU is a much more volatile stock.
I am therefore selling my position in the Roku (ROKU) November 2018 $40-$45 in-the-money vertical BULL CALL spread at $4.80 or best. This is a classic bird in the hand versus two in the bush situation.
By coming out here you get to reap a profit of $1,440 or 14.29% in 11 trading days.
This was a bet that Roku (ROKU) will not trade below $45 by the November 16 option expiration day in 20 trading days. That was a level 41.93% down from the all-time high forged at the beginning of October.
If you bought the stock sell it for the short term but keep it for the long term. (ROKU) is going much higher.
Here are the specific trades you need to execute this position:
Sell 24 November 2018 (ROKU) $40 calls at………….…$16.10
Buy to cover short 24 November 2018 (ROKU) $45 calls at..$11.30
Net Proceeds:………………………….………..………….….....$4.80
Potential Profit: $4.80 - $4.20 = $0.60
(24 X 100 X $0.60) = $1,440 or 14.29% in 11 trading days.
To see how to enter this trade in your online platform, please look at the order ticket above, 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 Vertical Call and Put Debit Spreads by clicking here.
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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
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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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.
