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 - (UPS) – EXPIRATION
EXPIRATION of the United Parcel Service (UPS) November 2020 $130-$140 in-the-money vertical Bull Call spread at $10.00
Closing Trade - NOT FOR NEW SUBSCRIBERS
11-20-2020
expiration date: November 20, 2020
Portfolio weighting: 10%
Number of Contracts = 13 contracts
Provided that United Parcel Service shares don’t drop more than $24.81 by the end of the day, you will realize the maximum potential profit in the United Parcel Service (UPS) November 2020 $130-$140 in-the-money vertical Bull Call spread at $10.00.
That means you earned $1,690 or 14.94% in 14 trading days. Well done and on to the next trade!
You don’t have to do anything with this expiration.
Your broker (are they still called that?) 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 November 23 and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
The logic behind this trade was very simple.
When the US economy recovers, you suddenly have to move a lot more stuff. The overnight package delivery companies are another great beneficiary of this coming upsurge.
UPS is one of three overnight couriers, including FedEx (FDX) and the US Post Office, and only the former is publicly listed.
Note that I was clever here by picking an upper $140 strike. That is right where we got enormous technical support from a double bottom on the charts that stretched back to June.
Stock players should keep the shares, which probably have a double in them over the next three years.
This was a bet that UPS (UPS) would not fall below $140 by the November 20 option expiration day in 14 trading days.
Here are the specific trades you need to exit this position:
Expiration of 13 November 2020 (UPS) $130 calls at…........…$34.81
Expiration of short 13 November 2020 (UPS) $140 calls at....$24.81
Net Proceeds:……............……………..…….………..………….….....$10.00
Profit: $10.00 - $8.70 = $1.30
(13 X 100 X $1.30) = $1,690 or 14.94% in 14 trading days.
