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 - Teladoc Health, Inc. (TDOC) – STOP LOSS
SELL Teladoc Health, Inc. (TDOC) April 2022 $75-80 in-the-money vertical BEAR PUT spread at $3.25
Closing Trade
3-29-2022
expiration date: April 14, 2022
Portfolio weighting: 10%
Number of Contracts = 26 contracts
This was a tactical trade in remote medical services Teladoc (TDOC).
TDOC has runaway to the upsides lodging monster gains in the past few trading days.
The stock is up 32% in almost no time at all and the short-covering rally continues.
Don’t underestimate the amount of liquidity still in the market as the Fed is still adding to its balance sheet.
I thought we were going to get a sharp dive where we could take profits but the path of least resistance is to the upside.
The Fed has cleared the way for inflation to be strong for the whole year and the market has priced in the Feds’ rate hikes.
Traders were diving into the most beaten-down stocks, but I am surprised with the price action in TDOC.
We will take the loss and move on to the next trade.
Here are the specific trades you need to exit this position:
Sell to Close 26 April 2022 (TDOC) $80 puts at………….………$7.75
Buy to Close 26 April 2022 (TDOC) $75 puts at……........…….$4.50
Net Proceeds:……………………..…..................….………..…….....$3.25
Loss: $3.80 - $3.25 = $.55
(26 X 100 X $.55) = $1,430 or 14.47%
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.
