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 - (V) –BUY
BUY the Visa (V) September 2020 $180-$185 in-the-money vertical Bull Call spread at $4.30 or best
Opening Trade
9-4-2020
expiration date: September 18, 2020
Portfolio weighting: 10%
Number of Contracts = 23 contracts
I am going to use this two day, 1,500 point dive in the Dow Average on no news to initiate a new position in Visa.
Visa is the quality play in the credit card area, recently growing at the expense of Master Card and American Express. The world is rushing into an all-digital economy and (V) is a major beneficiary.
They also have profited hugely from the move to “touchless” transactions where people are afraid of using physical cash for fear of contracting Covid-19.
This cycle of COVID-19 infections is imminently going to peak out and start declining, at least for the short term.
As a result, I believe the core long FANG trade is long overdue for a break. Instead, I think we are about to witness a major rotation into domestic economic “recovery” stocks like Visa. Stocks will keep going up, but the leadership will change. Bonds and gold are also due for profit-taking.
With the September 18 option expiration only 9 days off there are a handful of option plays that make all the sense in the world, offering very high return, low-risk returns.
I am therefore buying the Visa (V) September 2020 $180-$185 in-the-money vertical Bull Call spread at $4.30 or best
Don’t pay more than $4.70 or you will be chasing. Stock players should go ahead and buy the shares, which probably have a double in them over the next three years.
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 10 cents with a second order.
This is a bet that Visa (V) will not trade below $185 by the September 18 option expiration day in 9 trading days.
Here are the specific trades you need to execute this position:
Buy 23 September 2020 (V) $180 calls at………..….………$24.50
Sell short 23 September 2020 (V) $185 calls at……….…..$20.20
Net Cost:……………………..……............………..………….….....$4.30
Potential Profit: $5.00 - $4.30 = $0.70
(23 X 100 X $0.70) = $1,610, or 16.27% 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.
