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) – TAKE PROFITS
SELL the Tesla (TSLA) June 2019 $240-$250 in-the-money vertical BEAR PUT spread at $9.75 or best
Closing Trade
6-14-2019
expiration date: June 21, 2019
Portfolio weighting: 10%
Number of Contracts = 12 contracts
I am going to take the win here on my short position in Tesla. The stock hasn’t moved since I added this position, but volatility has collapsed. As a result, we now have 77.27% of the maximum potential profit in hand. Besides, I like making a 9.55% profit in only four trading days.
I am boarding a plane on Sunday night and it doesn’t land in New Zealand until Tuesday morning. Terrible things tend to happen in the market when I am locked up in a plane and can’t do anything about it. It would be irresponsible to do so a day before a Fed meeting when we could get an out-of-the-blue cut in interest rates.
In any case, the point of this trade was to teach you of the merits of vertical bear put spreads in stocks with very high volatility. I believe that I have accomplished that mission.
Therefore, I am selling the Tesla (TSLA) June 2019 $240-$250 in-the-money vertical BEAR PUT spread at $9.75 or best.
If you can’t get my price, reenter the order on Monday when they take out the time decay for the weekend. If you still can’t get done, then run it into expiration and collect the full $10.00.
This was a bet that Tesla shares would not rise above the $240 strike price by the June 21 option expiration in 9 trading days. It is also a bet that the stock could rally short of last month’s breakdown level, but no more. There is substantial resistance at the 50-day moving average at $238 which should give us some help.
This takes me to a rare 100% cash position. I will remain in cash in these difficult trading conditions until I see something extraordinary.
Here are the specific trades you need to execute this position.
Sell 12 June 2019 (TSLA) $250 puts at…………............………$35.00
Buy to cover short 12 June 2019 (TSLA) $240 puts at….......$25.25
Net Proceeds:…………………..………..………….….......................$9.75
Profit: $9.75 - $8.90 = $0.85
(12 X 100 X $0.85) = $1,020 or 9.55% in 4 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 on How to Execute Vertical Call and Put Debit Spreads by clicking here.
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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
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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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.
