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 - (TSLA) – BUY
Buy the Tesla (TSLA) August 2020 $1,700-1,750 in-the-money vertical Bear Put spread at $45.00 or best
Opening Trade
8-10-2020
expiration date: August 21, 2020
Portfolio weighting: 10%
Number of Contracts = 2 contracts
As much as I like Tesla for the long term, I believe it is still overheated in the short term. That presents a low-risk opportunity in the August options, which expire in 9 trading days.
I am therefore buying the Tesla (TSLA) August 2020 $1,700-1,750 in-the-money vertical Bear Put spread at $45.00 or best
Don’t pay more than $47.00 or you will be chasing.
This is an option play only. Stock traders should stand aside on this one.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and increase your bid by 20 cents with a second order.
This is a bet that Tesla (TSLA) will not trade above $1,700 by the August 21 option expiration day in 9 trading days.
Here are the specific trades you need to exit this position:
Buy 2 August 2020 (TSLA) $1,750 puts at…………...………$330.00
Sell short 2 August 2020 (TSLA) $1,700 puts at…………...$285.00
Net Cost:……………………..............…….………..………….….....$45.00
Potential Profit: $50.00 - $45.00 = $5.00
(2 X 100 X $5.00) = $1,000 or 11.11% in 9 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 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.
