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 - (UAL) – STOP LOSS
SELL the United Airlines (UAL) March 2020 $55-$60 in-the-money vertical Bull Call spread at $4.20 or best
Closing Trade
2-26-2020
expiration date: March 20, 2020
Portfolio weighting: 10%
Number of Contracts = 23 contracts
I have never sent a same-day STOP LOSS on a trade alert, but there’s a first time for everything. Dropping another 6% in a few hours has definitely taken the shine off this trade for me.
It’s not rallying into the close so I am going bail.
Risk control is the order of the day.
I am therefore selling the United Airlines (UAL) March 2020 $55-$60 in-the-money vertical Bull Call spread at $4.20 or best.
This was a bet that United Airlines (UAL) would not trade below $60 by the March 20 option expiration day in 17 trading days.
Here are the specific trades you need to exit this position:
Sell 23 March 2020 (UAL) $55 calls at…………..............………$12.00
Buy to cover short 23 March 2020 (UAL) $60 calls at………….$7.80
Net Proceeds:……………....…….………..……….................….….....$4.20
Loss: $4.30 - $4.20 = $0.10
(23 X 100 X $0.10) = -$230 or 2.3%.
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.
You must be logged into your account to view the video.
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.
Be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today's market, investors need every advantage they can get.
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.
