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.
(TSLA) – EXPIRATION AT MAX PROFIT
EXPIRATION of the Tesla (TSLA) April 2023 $130-$140 in-the-money vertical bull call debit spread at $10.00
Closing Trade
4-21-2023
expiration date: April 21, 2023
Portfolio weighting: double 20%
Number of Contracts = 25 contracts
Just to be clear, this position does not expire until 4:15 PM today. Since I don’t want to overwhelm you with seven expiration trade alerts all at once, I am feeding this one out ahead.
However, with the stock now a robust 24% above its nearest strike price, I think it’s safe to call this one a win.
As a result, you get to take home $3,000, or 13.64% in 29 trading days. Well done and on to the next trade!
I knew full well when the regional banking crisis first hit a month ago, stocks were wildly overreacting to the downside, especially those for brokers and fund managers. That turned out to be the case, with billions of dollars of new deposits pouring into the safety of large bank balance sheets and de facto government guarantees.
It helps also at the time that the Volatility Index ($VIX) had just rocketed to $31 and a Mad Hedge Market Timing Index that just plunged to only 17.
You don’t have to do anything with this expiration.
Your broker will automatically use your long position to cover your short position, canceling out the total holdings.
The entire profit will be credited to your account on Monday morning, April 24 and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
The flight of money right now is from small, undercapitalized, and questionable to large, overcapitalized and rock solid.
After markets have big moves like we saw in January, you tend to get no moves for a couple of months. Too much performance and market action was pulled forward in January.
Tesla is now the most widely owned stock in the world and accounts for a staggering 6% of the options market. Tesla will remain the top EV maker for the next decade easily.
This was a bet that Tesla (TSLA) would not trade below $140 by the April 21 option expiration day in 19 trading days.
Here is the specific accounting you need to close out this position:
EXPIRATION of 25 April 2023 (TSLA) $130 calls at……......….…$55.00
EXPIRATION of short 25 March 2023 (TSLA) $140 calls at…….$45.00
Net Proceeds:………………………………….……….…...................……$10.00
Profit: $10.00 - $8.80 = $1.20
(25 X 100 X 1.20) = $3,000 or 13.64% in 19 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.
