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 - Stitch Fix, Inc. (SFIX) – SELL – TAKE PROFITS
SELL Stitch Fix, Inc. (SFIX) May 2020 $18-$21 in-the-money vertical BEAR put spread at $2.70
Closing Trade
4-21-2020
expiration date: May 15, 2020
Portfolio weighting: 10%
Number of Contracts = 42 contracts
This is a short-term trade that online clothing company Stich Fix won’t rise above $18 by May 15.
After Lyft cratered 8% and I failed to take profits, I am inclined to take profits after SFIX dropped 3-4% this morning after the Nasdaq slips.
We are extracting 43.49% of the maximum profits in this trade at a closing price of $2.70.
The volatility is so intense in these markets that 5% daily swings are the new normal.
Nobody became broke by taking a profit.
If SFIX snaps back up, I could be inclined to execute another put spread, either way, traders must be nimble to avoid these seismic shifts decapitating them in the market.
An example of the chaos is oil crashing which affects hedge fund portfolios (who probably own tech stocks as well) when they get margin calls and need to sell to meet them.
I do believe we have pulled through the liquidity crunch at the initial panic sell-off but that doesn’t mean there could be another one if, let’s say, the mortgage services can’t meet its obligations because of millions of forbearances.
Risk is still extremely high, and the daily swings validate it. All trades have a short leash.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES AND DO NOT BUY THE STOCK.
Here are the specific trades you need to exit this position:
Sell 42 May 2020 (SFIX) $21 put at………...........….………$6.05
Buy to cover short 42 May 2020 (SFIX) $18 put at……….$3.35
Net Proceeds:………………...........……..…….………..…….....$2.70
Profit: $2.70 - $2.47 = $0.23
(42 X 100 X $0.23) = $966 or 9.66%
To see how to enter this trade in your online platform, please look at the order ticket below, 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 a Vertical Bull Call Spread” by clicking here at
http://www.madhedgefundtrader.com/ltt-vbpds/
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.
To see how to enter this trade in your online platform, please look at the order ticket below, 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 a Vertical Bull Call Spread” 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.
