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 - (SCHW) – TAKE PROFITS
SELL the Charles Schwab (SCHW) April 2023 $30-$35 in-the-money vertical Bull Call debit spread at $4.85 or best
Closing Trade - not for new subscribers
3-23-2023
expiration date: April 21, 2023
Number of Contracts = 25 contracts
I am closing out this position which we put on at the height of the financial panic 9 trading days ago. With 85% of the maximum potential profit in hand, the risk/reward of continuing for 16 more trading days is no longer favorable.
With this trade, we managed to capture the bulk of the crash in the Volatility Index ($VIX) from $31 down to $20.
It may be handy to have some extra cash if the market melts down again at the Friday close, which has been the case for the last several weeks.
As my late mentor, Morgan Stanley’s Barton Biggs, used to remind me, always leave the last 10% of a move for the next guy.
I hate to make money at someone else’s expense. Buy hey, a buck is a buck. In karate school in Japan, they always teach you to kick a man when he is down because that is when they are least likely to hit you back.
It is in that mean spirit that I took advantage of the Silicon Valley Bank crisis to dive in on Charles Schwab, which has cratered 20% in two days. As far as I can tell, the only connection (SCHW) has with Silicon Valley Bank is that they are both on the same coast. They don’t even have any deposits there.
I am therefore selling the Charles Schwab (SCHW) April 2023 $30-$35 in-the-money vertical Bull Call debit spread at $4.85 or best.
As a result, you get to take home $2,125, or 21.25% in 9 trading days. Well done and on to the next trade.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES. Just enter a limit order and work it.
To learn more about the company please visit their website at https://www.schwab.com
This was a bet that Charles Schwab will not fall below $35 by the April 21 optionS expiration in 24 days.
Here are the specific trades you need to close out this position:
Sell 25 April 2023 (SCHW) $30 calls at………….………...…..…$26.00
Buy to cover short 25 April 2023 (SCHW) $35 calls at…………$21.15
Net Proceeds:………………………….…………....................….….....$4.85
Profit: $4.85 - $4.00 = $0.85
(25 X 100 X $0.85) = $2,125, or 21.25% in 9 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.
